Article by Sherin Dev; Follow me on Twitter
In this article, Money Hacker introduces you with necessary steps and tools to develop a fail proof retirement plan. Retirement always a big deal if you have not planned well in advance or it is smooth deal if plan well in advance. If you retire without careful planning, you may find yourself depressed, stressed or just plain bored. Here are some tips to help you plan for a happy retirement.
- Plan your retirement early – Early retirement plan helps you to develop a right retirement strategy. It also helps to take maximum advantages from stock markets which always meant approaching for long time focus. An ideal retirement planning should start prior to 15 to 18 years from the date you have originally planned to retire.
- How much required for your retirement – This is an important question one should ask self to plan a perfect retirement. To get a right answer to this question, one should start from identifying present living costs and required future capital with a perfect, inflation adjustment calculation. Once you have identified present living cost, future capital requirements can be determined by the use of PMT function in Excel. Another important point should come under consideration is, choosing a retirement location based on your likes and dislikes. Make a list of the things that you want to do in retirement and locate the area of the country or world that has the most things that you enjoy. Some people want to retire on a beach, some on a golf course, and some on a lake. You get to decide.
- Budgeting – Budgeting is not only important when starts your retirement life but, it would be there in line always to get disciplined money management always. Once you have planned budgeting would do only after retirement, you are going to be a big loser because, and nothing will work if you have not made your life disciplined by having a right budget at the earliest.
- Retirement saving – You have lots option to save money for retirement. As a best practice, start saving for retirement by hikes your contribution to the maximum to employer provident funds or 401k. You can even choose other available, guaranteed retirement plan offers from current and future employers. You can also save retirement money by kept some money aside by adding it as a plan in your monthly budget. Social Security should never be considered as a major source of your retirement income. Most financial experts will tell you that if things don’t change within the next few years, your benefits will be greatly reduced and may not be available at all depending on when you plan to retire. That’s why it’s crucial to start planning now for your future. The more you know and the more you learn, the more prepared you’ll be when you decide to call it quits.
- Debt Management – Managing debt has an important role to bring your retirement plan to maximum success. Once should work to clear personal debts before taking an investment plan alive. There are number of excellent debt management article available here itself in this blog. Have a look. I am sure; it would help you in a better way to clear off all of your debts by working in a well structured way.
- Investment Plan – Your next step is to work for a better investment plan. The best option for the beginners is through approaching a carefully selected financial planner. Develop an asset allocation strategy utilizing your risk tolerance profile as a guide. Decide what percentage of your investments will be spread out between various asset classes such as stocks, bonds and cash. More aggressive risk profiles will be weighted more heavily in stocks, whereas more conservative risk profiles will be weighted more heavily in bonds and cash. The percentage of stocks, bonds and cash that you hold will change over time. As you approach retirement, it may be appropriate to reduce your percentage of stocks and increase your percentage of bonds and cash.
- Plan the Emergencies – There are certain must required plans should be in place when your retirement life starts. Once of the most important plan among them is to take necessary arrangement to meet uncertainties or emergencies. Choosing insurances that meet all the requirements would work better for you. Medical insurance for self and family, insurance for protecting assets, vehicles all would plan in a better way.
- Reviewing plan – Review your chosen retirement plan investments at least annually to make sure that your investment options are still meeting your financial goals. As you age or experience changes in your marital status, family or career, you might want to adjust your financial goals and investment strategy.
Most people have aspirations of an early retirement. However, most people cannot or are unable to do what is necessary to achieve that goal. The key is to be realistic about your financial situation and understand that it takes a great deal of discipline to achieve such a goal. It all really boils down to how much effort you’re willing to put into it. Good luck!
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