Retirement Financial Planning, personal financial planning
Retirement financial planning is a major component of personal financial planning, especially for people in the accumulation phase of life. If you are not retired yet, you are still in the accumulation phase. If this is you, then you've come to the right place. It may surprise you that planning for retirement is a relatively young discipline. Consider this: In 1930, only one in 10 workers was covered by a pension plan and Social Security did not exist! For early 20th Century Americans, retirement meant moving from the workforce to household chores. In the middle of the century, retirement was thought of as a short and sendentary experience. Today however, retirement can easily last 30 years or longer, full of life and activity! There are many topics to consider when planning for retirement. The following is a list of topics that are involved in this phase: * The effect of financial well-being on the quality of life Many of these topics are already covered in different parts of this website. Check the links below to see learn more about the different areas of retirement financial planning. 401(K) Plans Retirement financial planning is something that every person nearing retirement should do. But before we start diving into how many assets they have, how much debt do they owe, what their expenses will be like, etc., we first need to establish a life plan. A life plan is basically a description of what they want their life to look like during retirement, and it's based on what they value most. This could be things like children, grandchildren, independence, travel, fun, service, etc. A life plan also includes goals of things that you want to accomplish. We find that this process of creating a life plan is sometimes difficult for clients to get their arms around because they have only thought about retirement in very abstract terms. I asked one client recently what he planned to do on his first day after retiring from his job of 35 years. He said, "When my alarm goes off in the morning, I'm going to roll over." While this is a part of retirement that I'm sure most people look forward to (not having to do anything), having a passionate purpose and goals is critical to enjoying those "golden years". Retirement financial planning will help you be excited to get out of bed each and every morning because you have a purpose. At an educational seminar that I was giving about 1 year ago, I was talking about this value-based goal setting idea when one woman raised her hand and said, "We're all way past the point of setting goals in life. We should have done that long ago!" This person was missing was a very important fact of life, which is that life is far from over just because you are retired. Retirement is a time to pursue the passions of life that you never had time to pursue because you were always working. Retirement financial planning will help you to accomplish and pursue those passions, long after you've said goodbye to your co-workers. How Much Should I Save?? This is one of the biggest questions on people's minds when they start the retirement financial planning process. You want to make sure you are saving enough. This will depend on two things. First, how old you are, or in other words, how long before you are going to retire. And second, how much you need to save by then. If you are young and getting started early, you may only need to be saving 10% of your income annually. If you are closer to retirement or are getting started later in life, you may need to be saving 20% or more of your annual income. The lifestyle that you want to have during retirement, how much you already have saved, and what permanent sources of income you will have during retirement will all impact your target annual savings amount. Go From Retirement Financial Planning page back to Home Page
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