How long do you suppose you will be working? If you are a working professional, there may be a lot of times when you face the question of productivity. At the turn of the previous decade, the people aged 60+ rose from 8% to 11% in 2011. Reports suggest that by 2050, this figure will rise to 22%.
Data indicates that about 40% of the older American generation will work throughout their life. It makes financial planning an extremely important issue. It is because as we age, our productivity level starts to go down. It also makes sure that despite the non-availability of work, there is no stop to income generation. Therefore, you can continue to enjoy your life aspirations.
Retirement is a pursuit of happiness and wellness. When you are over 60 and have spent a considerable portion of your life working for needs, it is okay to aspire for sustained and contented living. To do that, you have to start today proactively.
The wrong notion in most people’s minds is to keep on saving a portion of their income, which may suffice for the future. Most people fail to consider factors such as inflation and the value of money, which can be unfavorable for you.
Merely savings cannot compensate for the loss of monetary value when market position is altered. Many economic factors such as inflation, recession, etc. also lead to price rise. It means that your estimation of an amount that can sustain future needs is cut short.
Retirement planning may sound too tedious and technical. However, following these simple steps, one can ensure lifelong financial stability and happiness.
1. Evaluate the Financial Position
No planning ever began without analysis and careful evaluation. Before you set up a financial retirement plan, make sure to evaluate your financial position first. A look at the annual accounts gives you a sneak peek into how strong or stable your financial position is. Evaluating debt and revenue positions helps you to mitigate your liabilities.
It also helps you to resolve your creditors beforehand and create a sustainable income source later on. Your financial position will also tell you whether it is feasible for you to invest in long term wealth or create short term liquid funds.
2. Goal-Oriented Investment
Any financial plan is futile if it is not goal-oriented. Be it traveling the world or a comfortable, cushy retirement. Your goal and objective will determine how and when to plan your financial resources.
Often, people who want to plan their retirement are confused between creating a savings pool and investing further in long term benefit plans. This confusion occurs due to unclear goals for financial planning.
Most retirement plans cannot provide the right benefit because they have been planned hastily and without proper objective. A person wanting to retire and travel the world would need a financial plan that would create long term liquid wealth and short term liquid funds. For more information & research regarding your investment goal, read several blogs at silvers fan.
3. Setup Continuous Income Sources
The reason why most people fear retirement is that it will stop income generation. However, they fail to realize that if one can understand and carefully plan a steady investment, the problem is tackled. If you want to create an income source lifelong, the best solution will be to start early and diversify your investment.
A combination of short-term funds, deposits, and long-term benefit plans will let you save adequately today and spend sufficiently tomorrow.
However, you must bear in mind that the combination of investments you do must consider changes in the market position. Diversifying funds and investing in various sources help you stabilize your financial position even when future market position is unfavorable.
4. Make Provision for Contingencies
People who plan well know best that a margin is always left blank for any future emergencies. The ability to plan your retirement includes setting up short term liquid funds that can come to your rescue if you are met with a contingency. It is impossible to know what situation you may face in the future.
However, it is possible and smart to gauge contingency and make the provision for it today. Contingency funds are not specific to a type of scenario, which allows you the flexibility to set up the fund by allocating a portion of your wealth.
Additionally, you can also allocate different funds for different types of contingencies and plan accordingly. Many people bifurcate contingency funds into medical contingencies and other calamities. It helps them strategize which fund to put where and when.
5. Aim For Long Term Maturity
Most people plan their retirement soundly with the help of the right financial tools. However, they give in sooner or later, to upcoming circumstances and liquidate their investments before maturity. It negatively impacts their retirement objectives and renders the entire process futile.
It is important to realize that any fund is more than a monetary commitment. It requires a substantial time-bound commitment also. Any retirement plan or investment cannot be assessed in terms of benefits if it does not adhere to a maturity period.
A lot of people prefer term or annuity plans and retirement benefit schemes. Many people also opt for a market-based ULIP Annuity Pension Scheme and insurances. These plans customize your money into long term benefits and require long term commitment. Putting money in similar plans also helps to reduce the temptation to break them midway as they do not possess the flexibility of opt-out.
The Bottom Line
Ultimately, the mantra to contented retirement is early realization and strategic investing. Retirement planning involves a considerable amount of research and analysis of a lot of factors. Chiefly, the market volatility and return on investment serve as standpoints to base your financial planning.
Retirement financial planning must consider a stable debt-equity ratio. It will give you the best benefits in the post-retirement future. Thus, follow the five ways mentioned above to make an appropriate retirement plan and live happily!