Category Archives: Retirement Planning

Be Clear in Your Answers to Some Crucial Questions before Giving up Job Earlier

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Most of us really hate to do office work for 9 hours. We live a monotonous routine-bound life and crave for a permanent break from it. But easier said than done! Regular retirement requires wise planning but early retirement needs more attention and acumen. You must have solid accumulation of wealth to support yourself throughout the remaining days of your life. When you retire earlier, you also save for your regular retirement.

Here is a list of some crucial points that you should ask yourself before hanging your boots up.

Why are you retiring?

It is the first and most important question and none other than you have the accurate answer. Is it your health problem that is prompting you to call it a day? Or you don’t like the ambience at the workplace? Do you have any intention to commit yourself to another career that you are passionate about? Or you simply want to enjoy time with your family? Be clear about the actual reason as to why you want to retire so early and think if it is a good reason to give up your job that earns you income following a regular interval.

Will it be possible for you to manage your family expenses without a regular job?

Once you retire, you become jobless. And if you are not alone, you have to think twice before taking such a crucial decision because the entire family is dependent on your income. Now there are other sources of income for people, including dividends from stock, earning from share, rent, part-time job etc. Your dependence on side income may change over time. However, the question remains same – if you would be able to manage without your 9-hour job?

Divide the questions into some parts and ask yourself the followings:

  • Do you have fund to manage all expenses and maintain the same living index after retirement?
  • You should not expect the market to be consistently smooth. Depending on the economic situation, you may get very poor return on income at times. Are you saving enough to make up for the loss and manage in the same way you have always did?
  • If you are a parent, have you considered rising educational expenses?

What is your plan for after-retirement healthcare?

Healthcare expenses can leave you bankrupt if you are not prepared for it in advance. Have you calculated how much will be needed to pay for health insurance policies you already have? You also need to set aside a tidy sum for unforeseen health hazards that may happen to you or anybody from your family. If you or anyone in your family is prone to frequent illness, you may have to save more for precautions as well as treatment.

Do you have any backup plan for rainy days?

You cannot always expect sunny days in your life. What will you do in times of financial emergency? Without a solid plan in place, you will never be able to overcome the disaster and your entire planning will sink on the midway. I hope you already have life insurance. Do you have other contingency funds? Have you any plan to downsize your current expenses by shifting to a smaller home? The last-time economic recession eclipsed over the global scenario for a couple of years. If that happens again and stays for a longer time, how do you cope up with the situation? The nutshell of my point is you should build a solid cash cushion to support you throughout the troubled phase.

How will you stay healthy and cheerful?

It is your responsibility to keep yourself healthy both physically and mentally as well as ensure the same for other members of your family. Are you going to make some drastic changes in your plan to eat healthy and stay happy or it will be same as it is today? Making abrupt but unrealistic changes won’t make you feel comfortable and that could gnaw at you both physically and psychologically. Also get prepared to face volley of questions regarding ‘why so early’.  At first, it is fine but after that, you will get irritated. How to handle such situation? Just think about that.

What is about your future living index?

I hope you have no plan to live like a hermit or nomadic. Those are extreme cases and I want to focus on common people showing rational behaviour. Do you want to maintain the same standard of living after retirement and most importantly, have you enough to ensure that? If you have a low budget for pro-retirement phase, you have to cut down expenses in many fields. And if you want to maintain the same level, you need to have an adequate amount of saving. At this point, it is important to allocate a monthly fund for miscellaneous expenses as those eat into a larger part our income.

Do you have other points to add to the list? It would be nice to hear from you. Your opinions are always appreciated and highly valued.

Managing Your Wealth For Retirement

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In the current economy, preemptive planning is necessary if you would like maintain your standard of living through retirement. There are a number of ways to manage your wealth for use in retirement, both conservative and liberal. The methods that you choose for managing your money and saving for retirement all depend on the amount of risk you are willing to take.

Many of the tips online focus on common-sense ideas that will help to develop your portfolio while also creating and continuing your financial stability. These include ideas such as “reduce and limit your debt”, “avoid “get-rich-quick schemes”, and “have realistic and concrete goals.” The following bullets will succinctly explain these and a couple other guidelines for helping to manage your wealth for retirement.

  • If you live with continuous debt (credit card or otherwise) throughout adulthood, you will not be able to put away money for retirement purposes. It would behoove you to limit any and all credit card debt unless you are able to pay it of almost immediately and to pay off as soon as possible any student, home, or car loans that you cannot escape or have already accrued.
  • One rule of thumb that some people use for developing their portfolio is: “If it sounds too good to be true, it probably is.” Don’t be duped by a dubious scammer who will harm your financial standing.
  • Be sure to ascertain exactly the expectations of an investment, the amount of work that must be put in, the return on investment you will receive, and the methods that will accomplish each.
  • Take the time to find resources, online or in print, that will give you an idea as to what you should expect as “realistic and concrete goals”. For some people, this process will include a financial advisor who can help guide you at the beginning of your wealth management path.
  • Look at the big picture when planning for retirement, creating a wealth management plan, and/or initiating your wealth management for retirement plan. This includes making considerations for one’s beneficiaries, the standard of living one would like to continue, and the significant changes in the economy, as well as other factors.

There are a number of what can be called “traditional” methods of creating and using retirement funds, which include 401(k) accounts, mutual funds, and lifetime annuity plans.  Financiers, economists, and financial planners often debate the respective merits and disadvantages to each plan, and the individual’s priorities and preferences are often the deciding factor in selecting one or more of these options. For example, life annuities allow for the highest monthly distribution, but they often neglect bequest considerations; life annuities are also available as fixed or variable plans, which play into the choices an individual may make regarding these plans. Continuous contribution and/or employer matching to 401(k) plans will practically guarantee your financial security and a certain standard of living, but your wealth will not increase by a substantial amount by just using this method.

While the variety of accounts and investment options may make you want to run away screaming, there is even a simpler tip to managing your wealth. Most sources advocate maintaining liquid investments. This means saving money from every paycheck to be used for emergencies instead of frittering away your potential wealth on illiquid investments, such as jewelry. That is not to say that you can’t or shouldn’t invest in things like houses or cars, but that having a fund that can be accessed if needed is definitely a good idea.

To recap, managing your wealth can begin with simple steps—limiting your debt, thoroughly researching your investment and account opportunities, having some liquid investments in case of emergency, and making a coherent plan for your retirement—, and these steps can do nothing but improve your financial standing and ability to invest further.

Planning for Retirement?

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Life after retirement? That must be a complete hell; at least the ordinary people who are often challenged by scarcity of money think that way. During their service life, they find it hard to meet both ends meet. So, it can be imagined how much trouble they will face in post retirement phase. However, retirement does not equal to troubles for everyone. If you start planning earlier and apply some acumen, it is possible that you will enjoy a smooth sail in twilight days.

First of all, just think what you will lose after retirement? No clapping to guess! You will receive no monthly salary. Not only that, you will also miss other facilities like increments, medical allowance, travel grant, bonus etc. It means inflation will hit you harder than what it is doing now. For some retirees, problems get to such a height that they are almost forced to liquidate some of their assets. Lesson to learn – plan well and plan earlier to enjoy happy retirement!

What many of us find challenging is how to make a balance between income and expenses once we retire from our job. If you have been living a carefree, luxurious life, will it be possible for you to do a big compromise after retirement? Even if you compromise, can you live happily thereafter? Earlier you realize this fact, better you can lead your retired life. Now let us see what benefits you can get if your retirement planning is done perfect. First of all, you can definitely accumulate a lot to support your post-retirement days. There are a lot of retirement schemes investing in which will pay off dividends throughout your life. If there are some sources to get monthly income from, it will be easier for you to manage household expenses and maintain the same standard of living. Here are 3 steps that can help you enjoy a happy-go-lucky retirement.

First make an assessment of the cost of same standard maintenance. You obviously want to enjoy the same lifestyle. Estimate inflation-induced price rise when you will take retirement. Consider healthcare cost, travel expenses, children’s’ higher education, rent fees, loan cost, family celebrations etc. Make a total of all these estimated expenses and you will get a rough idea of how much will fit your case.

Pay attention to regular saving. Once you have found out how much you need after retirement, it will be easy to estimate what should be accumulated to substitute your pre-retirement earning. I think that you must pile up a little more than your pre-retirement income.

When you will invest in a healthy retirement planning, consider some parameters like portfolio balancing, risk, taxation, diversification, estate planning. It is because you need to manage all of them. Make sure that you have enough liquidity to serve contingency purpose.

The key to a successful retirement planning is perfect utilization of your income in both categories – consumption and saving. Assess your needs at every stage of life and take a discipline approach towards investment for retirement purpose.