Retirement Planning- An Overview

Retirement is a very important part in one’s life. Not all of us experience this phase of life. From both financial as well as personal point of view, a comfortable retirement is urgently needed. It requires rational planning and years of diligence to make the future years wealthy and bright. Even once you reach this phase of life, due care and planning are required to manage your retirement properly. It is undeniable that all of us want to retire comfortably but lot of complexities and intricacies are involved in successful retirement plan. It requires years of commitment, homework, proper investment plan and prudent savings for gainful retirement planning. Proper planning is essential in all the endeavors in life. So is the case with retirement planning. Early, continuous and judicious planning can only build a huge retirement fund for you.

Needs for Retirement Planning

Before delving into the possible options for retirement planning, we need to understand the needs to secure a financially wealthy retired life.

Uncertainty of Pension Benefits & Social Security

The prospects of state sponsored retirement programs are not bright. In the developed world, increasing number of people are entering into the retirement phase of life. This demographic disadvantage in the developed world is putting enormous pressure to the state exchequer. Moreover, because of the advancement of the medical science, the average age of the people has increased, which resulted in to more burden to state coffers in terms in increased payment to the retired persons through these pension and social security programs. This increased liability of the government, has made these programs little uncertain.

Unforeseen Medical Contingencies

As we grow older, we become more prone to illness and medical problems. Any serious medical crisis may eat away a huge chunk of our life long savings. So one should have proper long term health care policy for himself or herself as well as for his or her family members.

Securing the Lives of Your Family Members

You may have reached the autumn of your life but your children and grand children have many years ahead of them. With your years of savings, you can finance their education needs of them or purchase real estate for them.

Retirement Calculation

One important part of retirement planning is retirement calculation. These calculations are indeed very handy to make your own retirement plans at the current period such as how much to save at the current period to secure a better future. Smart softwares are used for retirement calculation. These enable you know whether your current rate of savings are adequate to secure a pre fixed amount of income after your retirement. And you can adjust your current savings accordingly. This online planner works as an expert retirement advisor in designing your savings and investment strategies. Here the role played by the financial advisors is also undeniable. They offer valuable input to the retired persons to manage and organize their finances well. They aim at to manage your finances in such a way so as to maximize the returns by beating the rate of inflation.

Various Retirement Planning Options

In order to build the retirement nest egg, a variety of options are available for you. If you can start building the process at an early age, you can easily smooth out any future financial hiccups. Various sources for retirement savings are listed below.

Income from Employment

Your annual employment is perhaps the largest source of future savings. Just calculate your post-tax annual income. From this subtract your annual living expenses. The amount left is the discretionary savings at your hand. You can surely save a large portion of this amount towards your retirement.

Employer Sponsored Retirement Plan

You may or may not opt for employer-sponsored retirement plans. If you do not opt for this plan, you have to look for other sources to fund your retirement. If you do, these funds are indeed helpful as they cover living expenses during your retirement phase. But, there are some drawbacks associated with these plans. You may voluntarily take retirement at the age of 55 instead of 65, but your employer may not be willing to provide you the benefits till you reach 65. Or else they may in some cases disburse the amount but with a steep penalty. This significantly reduces the received amount.

Savings and Investment

These are good options to build the money for future. If you have sizeable current income, you can invest in variety of high-yielding investment avenues available in the market. For the risk averse, government securities and Treasury bonds are good options are they are well secured. Or else you can also invest in the equities market. Investment in equities is more risky. Instead of investing directly into stocks of companies, you can also tread the mutual funds routes. The qualified fund managers will manage your money well so that you get better returns. Whatsoever, it has been revealed through various researches, that equities market fetch better returns than the government securities market in the long run. So, it is advisable to invest in blue chip stocks and hold those for long run. Another, basic investment philosophy is that the investors should keep in mind that they should diversify their investment so as to reduce the risk. They should not keep all the eggs in basket.

Other Sources

You might be having other sources of funds to build your retirement net. You may be possessing a real estate which you plan to sale upon your retirement or you may inherit a lump sum amount of money. Whatever be the other sources of funds that you happen to have, do not include those in your retirement projections unless and until you are cent percent sure of its occurrence. You may also receive other unanticipated income from various sources such as gifts, bonuses or lottery winnings. You receive this kind of unexpected cash flows from the blues, do not hesitate—just add the amount to your retirement fund.