Work is a big part of many people’s lives and contributes to their sense of purpose and identity. Ask yourself if you’re ready for a lifestyle change. Are you prepared to leave the responsibilities, daily association with colleagues and other positive aspects of working behind, and set a new course? If you are unsure, it can be helpful to talk it over with family and friends who have already entered into retirement.
Both the big picture and the fine details of your financial and emotional states are important to consider when assessing your readiness for early retirement. If you're not emotionally ready to quit working, you may not be ready to retire.
Why need Planning?
Planning gives you best chance of achieving the financial security and lifestyle you would like in the years ahead. It also helps you to take control of you own life. Do it when you are healthy and independent and can make well-informed decisions. There are some key factors you need to consider for retirement plan:
Some Key Factors You Need to Consider
How much do you have?
No matter how you see yourself, setting a budget can help. Before you can start planning your retirement you should find out how much super your currently have. Your assets, liabilities, income and expenses will be considered in planning your future retirement.
Determine how much you will need during retirement
Retirement is expensive. The general rule is you will need 80-100% of your pre-retirement income during retirement. However, depending on the lifestyle you want to lead and your family obligations, this amount may be excessive or insufficient. The best way to determine how much income you will need is to itemize your current expenses and determine what will decrease and what will increase. Your financial advisor can assist you with this process by preparing a customized Personal Needs Analysis. Identify your income Sources it is important to understand your sources of retirement income and whether they are exhaustible or lifelong.
Potential income for retirees will generally come from four sources: Social Security, company pension and profit sharing plans, individual tax-deferred accounts and personal taxable savings. Personal savings, both taxable and tax-deferred, is the most significant source of income for many retirees. Part-time employment may also provide an important stream of income for some.
How you can save for Retirement?
How you can save can be as important as how much you can save. Know how your savings or pension plan is invested. Put your savings in different types of investment. There are some steps which we can apply in planning process:
- Take Advantage of time
- Find extra money to save
- Maximize your saving at work
- Build a diversified portfolio and develop appropriate strategies
- Review your written retirement plan presented by your financial advisor
- Put your plan into action
- Monitor and adjust your plan on an ongoing basis.
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