Retirement

Approximately one third of your life will be spent in retirement. Though you cannot control the future, you can create an effective retirement plan that will help you shape your future and take care of your worries about the future. Effective retirement planning will empower you to have a happy and carefree retirement.

Guidelines for effective retirement planning:

1.   Design the lifestyle you want to live during retirement
It is only when you can see the future clearly that you can start to design your retirement plan. That is why retirement planning starts with getting a clear mental picture of your desired lifestyle after retirement.

2.   Assess the factors that can drastically impact your retirement

• A longer lifespan that will require savings to last longer      
• The effect of inflation on the future buying power of your money;      
• Financial setbacks that may deplete your assets too quickly; and      
• Rising health care expenses

3. Determine the gaps in your savings strategy
by estimating your income and expenses according to the number of years you expect to live off your savings. Current estimates suggest that you might need approximately 80-100% of your pre-retirement income to live comfortably. If you don’t identify and address these gaps you might run into trouble in the future.

4. Acquaint yourself with the key components of a successful retirement income plan (e.g., budget, asset allocation strategy, withdrawal strategy)
Know what actions need to be taken for a successful retirement, and what resources are available to provide support and guidance.

5. Make sure that you understand your retirement benefits i.e. benefits you will continue to receive in retirement from your employer or retirement annuities, and familiarize yourself with how they will work e.g. how to choose the best payout options. Be sure to factor in your spouse’s benefits as well, where applicable.

 6. Assess future health care needs and maximize savings
Specifically intended to meet future health care costs. During retirement planning, consider funding long term care insurance, if you haven’t done so already.

 7. Create a retirement planning strategy that covers your expenses
and how much income you will withdraw from your assets. Some advisors suggests that withdrawing more than 4 percent increases the likelihood that retirees will deplete their assets prematurely.