Retirement Plans – Why Plan Ahead

 In Finance

Retirement Planning may seem unimportant when we are young, healthy and generating income. However, retirement is one of the most important stages of our life. Retirement can enrich our lives because it frees up time and gives us the opportunity to chase our life long dreams.

You can also consider Early Retirement. You can join a new group of thinking.  It is called the Early Bird Scheme. You can choose to retire early and leave your 9.00 – 5.00 job behind and live simpler but start kicking your bucket list.

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However, retirement planning carries with it a very important financial perspective.  It may take us years to build up the comfortable retirement we are planning for our golden days. Even when we reach retirement, we are going to be faced with financial responsibilities that stay with us for the rest of life.  Our circumstances change, our needs change, and our income changes.  Our ability to generate income will dwindle.  Therefore, retirement needs excellent planning.

It’s Never Too Early for Retirement Plans

We would all like to retire in comfort and have ample funds to cover costs of travel, family meetings, and eventual illness or nursing needs.   Retirement plans can seem complex and daunting.  However, if planned properly retirement can be an exciting time in our lives, where if we have our health, we can truly enjoy the best quality of life.

In this article, we will start a process of retirement plans.  We will help our audience to do a proper strategy.  We will help you put an investment plan, reachable savings targets which will eventually result in a long-term success.

retirement plans

Retirement Plans Require a Solid Plan – Why We Cannot Depend On Social Security Systems for Long

Up to a decade, ago many people would not think about making a retirement plan.  This was simply because gainfully employed people relied on government pension benefits for their financial security.

However, today we live in a world where longevity has been extended and as a result, we have an aging population. This is now putting a burden on the working-age population whose contributions cannot cover the needs of a retired population.

Pension costs are exceeding income in mostly all European nations. Health care has become more and more excellent. People are living longer and as a result, greater burdens are being placed on the system.

Why We Need to Have Retirement Plans

# Medical Expenses Not Previously Accounted for.

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Even if social security will cover your pension, you will need to learn to live with less from one day to another.  Most government pension funds will only cover 75% or less of your last salary.  Having to make this adjustment will not be an easy task.

Moreover, the amount you will receive will not be sufficient to cover medical expenses which will naturally increase as we get older. Medical problems typical to old age increase.  Therefore, unless we have solid retirement plans and a nice nest egg to fall back on, we could be facing a very poor quality of life. We may even watch our loved ones’ health deteriorate without being in a position to provide the necessary medical assistance.

Taking out a health insurance at a young age is one way of overcoming this problem at an affordable cost.  Long-Term insurance is a consideration for retirement plans and covering any medical costs, which are otherwise unaccounted for.

#Inheritance Planning – Why You Should Think of your Family.

testament-1183175_640If you are lucky enough to have had a lifetime of success and accumulated assets that you would like to live off the income.  However, these assets, if not properly administered may end up being a burden instead of a gift to your family unless you plan for your inheritance.

Whichever part of the world you are, it makes sense to consult with specialists who guide you on how to plan for your inheritance tax.  Which part of your assets need to be liquid in order to pay taxes and free up other assets for your family.

Retirement planning requires that you have liquidity and making sure that your assets give you a liquid income. Yet be prepared for the future of your loved ones, should be a consideration.  You do not want the Government to bite into your hard-earned savings, and deprive your family of what is rightly theirs by poor planning.

How Much Will I Need to Retire Comfortably?

Well, to be honest, your lifestyle is the real answer to this question.  There is no absolute figure or number that will guarantee that you will have an adequate amount for a comfortable retirement.

However, let us expect to say that you will have more free time on your hands. Expect that you will reasonably wish to live in the same standard of living as before your retirement.

The real answer relies on answering a few questions that are related to your retirement plans.

Here is a list of  what you need to get your head around with:

      1. What is the target age would you like to set your retirement plan around?
      2. What is your annual spending as it is now that you are an active income earner? Use this figure as a guide.  It is safe to estimate that you will need around 75-80% of your current income to maintain your lifestyle.
      3. Make a list of your current savings and investments. Add a figure that you realistically think you can add to augment this figure.
      4. Annualize the rate of return on your investment as well as any income from pension funds of IRA’s
      5. If you have IRA’s you need to get a realistic estimate for the (1) retirement target date
      6. If you have any social security that you will benefit from adding it to 4+5 above.

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Inflation – Factor it in Your Retirement Plans

You will have to make an allowance for inflation as this will bite into your income.  The value of your cash today will be less than the value of your same cash tomorrow.

This list is probably a fairly simplified list on how to calculate your aggregate income in “x” amount of years but it is a very real situation for many.

Get advice on how to keep the value of your investments “real” and keep inflation in check.  One good way to investing for your future is in Gold IRA’s.

What is a Gold IRA?  Is A Gold IRA the best-suited investment for your pension fund and your retirement plans?

Bottom line, curbing inflation and revising your contributions for your future nest egg, are both very important factors for your retirement plans.

Growing your capital so that you will have a real income by the time you plan to retire requires early planning.

Conclusion on Retirement Plans

If you are looking forward to your retirement, you definitely need to make good and early plans.  Subscribe to our blog and receive free retirement advice. You will receive our newsletter with tips, tricks, and guidance for your financially free future.

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