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Retirement Planning

Picture an individual who has gone out of their way to work extremely hard and built a life for themselves and their family—a life characterized by happiness, accomplishments, and dreams. However, as the person nears retirement, they discover their goals and dreams change.

They now want to spend more quality time with their loved ones, travel and explore the world, or even have good health. The individual may also want to see their children succeed in higher education, business ventures, or weddings.

Unfortunately, the person discovers they cannot achieve these dreams because they never prepared appropriately for retirement.

What Is Retirement Planning, and Why Should It Matter to Me?

Retirement planning refers to the process of preparing for your future life so that you can continue meeting all your goals and dreams independently. The process involves setting retirement goals, estimating the amount of money you will need, and investing adequately to grow your retirement savings. It is a fundamental component of successful financial planning.

Everyone has an idea of where they would want to be in the future, but retirement planning bridges that. You do not retire from life, just from work. You still have dreams to accomplish post-retirement life. You want to continue with your everyday lifestyle without worrying about expenses.

What is retirement planning?

Retirement planning helps you in several different ways, including the following:

  • Fulfill your retirement goals: Post-retirement is a phase in life that comes with lots of time to achieve your goals such as travel, new hobbies, starting a venture. You may also have several commitments to fulfill, like seeing your children through higher learning. Retirement planning prepares you for these dreams and commitments.

  • Prepare for emergencies: Emergencies are part of life and often inevitable. You will be well prepared for medical expenses and other financial emergencies with appropriate retirement income.
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  • Maintain a good lifestyle: After you retire, sadly, you won't have your monthly salary or income to sustain you and your lifestyle. However, if you want your current lifestyle to continue or even have a better one, you must have sound retirement income planning.

  • Prepare for longer life: The average life expectancy is higher today and continues to grow. So if you plan today, you are making arrangements for a much larger retirement income to sustain you over the longer post-retirement life.

  • Leave a legacy: You have worked all your life to build a life of dreams, achievements, and happiness for your family. You want them to have this kind of life forever, even after you are gone. Retirement planning is key to achieving this goal.

How To Plan Retirement

Retirement planning should start as soon as one starts earning. However, it is unique to each person. There are a few steps to plan for your post-retirement life, no matter your current financial situation. Firstly, set your retirement date. Secondly, list the goals you want to achieve after retirement.

Thirdly, identify and list expenses that will persist after you retire, such as travel, medical, child education, etc. Fourthly, plan for emergency funds for unexpected events. Fifthly, determine the amount of savings you have today and what you will need after retiring. Sixthly, determine the difference between current savings and future financial requirements. Lastly, invest in a retirement plan to bridge the difference.

Do I Need a Financial Advisor?

Planning for retirement is a delicate affair, and you can make a simple mistake that has a lifelong adverse impact on your future. You could lose all your savings. A retirement planning advisor exists to help you make better financial decisions regarding you, your money, and your future. The advisor will work with you and your employer to establish a retirement plan unique to you, your situation, and your needs.

Frequently Asked Questions

There are six simple steps to retirement planning. First, identify the age you will retire, list goals you wish to achieve post-retirement, identify post-retirement expenses, plan for emergencies, determine your current savings, calculate future financial requirements, determine the difference between the two, and invest in a retirement plan to bridge the gap.

The five years before retirement are crucial to preparing for your retirement. Among the things you should do include cutting down your expenses to increase savings, diversifying your investments, determining financial requirements after you retire, and educating yourself. Ultimately, you should have a sound retirement plan.

Retirement planning is important in a variety of ways. It helps you accomplish your retirement goals, prepares you for financial emergencies, helps you maintain your current lifestyle or have a better one, prepares you for longer post-retirement life, and helps you attain a lifetime legacy for your family.

Identifying sources of income, estimating and cutting down expenses, and implementing a savings program.

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