Planning for retirement is not only an essential part of financial planning, it’s an essential part of your life. And yet, many people delay this crucial action, or prefer not to think about it at all, letting life happen to them and taking their chances on what the future may hold.
But time is relentless and to ignore this vital area of your life is simply unwise. And it’s never too early to start. While retirement planning can seem overwhelming, especially when it seems far away and somewhat complicated, it can be simplified by focusing on a few key points.
Take charge of your life – the whole of your life
Begin the process of planning when young
The earlier you start planning for retirement, the better. Being young gives you more time to save and invest, giving your money ample time to grow. Compound interest is such an extraordinary tool to grow your wealth, and when you start young you unleash that power to full steam. The more time you have to build your future, the more time you have to change your mind on strategies, options and funds and redirect your portfolio to your advantage.
Set specific goals
Specific retirement goals affect how you save and how you strategise. You might for instance, target a specific retirement age or plan a particular lifestyle you’d like to maintain, and the monies you will need to achieve that. Setting goals is actually fun if you’re running with the right discipline, and will help you stay motivated and focused on your retirement planning.
Calculate what you will need in retirement
It’s important to have some idea of how much money you’re going to need in retirement. This can be quite hard to calculate, so getting experienced input from a professional financial adviser is a good idea. Calculations will depend on factors such as your lifestyle, healthcare costs, and life expectancy.
Create your retirement plan
Once you have your goals reasonably worked out, you can then develop an outline of how you are going to achieve these goals. This plan should include strategies for saving and investing, as well as how you’ll manage your retirement income. A financial advisor can help you create a retirement plan that is tailored to your specific needs.
Be canny – maximise your retirement savings
Whichever way you look at it, it’s important to save as much as possible for retirement. Begin with a pension fund – either from your company or something that you set up on your own – or preferably both. Consider additional options such as retirement annuities, endowment policies, insurance policies, and most importantly, investment accounts. Learning how the stock market works is hugely to your advantage, and either save or re-invest any winnings from that arena.
Manage risk well in advance
As you approach retirement, it’s important to manage your investment risk. This means shifting your investments towards more conservative options, such as bonds, to protect your savings from market fluctuations. A financial advisor can help you to assess and manage risk, ensuring your retirement savings remain protected.
Consider your most expensive factor – healthcare costs
Healthcare costs can be a significant expense in retirement – and probably your most irksome expense. It’s important to factor these costs into your retirement plan and to consider options such as long-term care insurance. It’s good to find out what you can do to mitigate surprises in this area long before you reach retirement – and chatting to a professional who has your best interests at heart, is the best thing you can do to form a plan to manage these costs.
Plan for taxes
Taxes can be a significant expense in retirement. It’s important to consider and understand the tax implications of your retirement income, and plan accordingly. Very often this is an area that people are not fully educated in – and it’s best to learn the facts long before retirement so that there are no surprises in store.
Review and adjust your plan on an ongoing basis
Retirement planning is an ongoing process. It’s important to review your retirement plan regularly and make adjustments as necessary. This may involve adjusting your savings or investment strategy, or reassessing your retirement goals.
And finally – seek professional advice from a reputable financial advisor
Retirement planning can be complex, therefore it’s the sensible thing to seek professional advice. A financial advisor can partner with you, help to create a retirement plan tailored to your specific needs, and apply skills and insight to help you navigate the complexities of retirement planning with confidence and peace of mind.
Find the top-class professionals who can meet your expectations
Complete Financial & Business Solutions (CFBS) comprises a group of top-class professional financial advisors and business analysts committed to sound financial and business solutions based on a highly personalised approach. Passionate about ensuring peace of mind through the in-depth analysis of individual financial and business circumstances of our clients, we are able to create unique solutions, and regularly review these solutions to consistently meet service expectations and lifestyle goals.
Find us at: www.cfbs.co.za
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