Essential Decisions For Financial Planning For Retirement

If you are going to have the kind of retirement that you imagine yourself having, you need to have the right retirement savings plan in place today so that you will have the financial means to enjoy your retirement in the future. When it comes to financial planning for retirement, the decisions you make today will be some of the most significant decisions of your life. The right decisions can mean the difference between a financially secure retirement and a retirement filled with financial worries.

The goal of your retirement planning should be to make certain that you will be financially able to afford the material comforts and have the money to be sure that you will be taken care of in case you are stricken by illness or accident during old age. A financially secure retirement requires making decisions based on a calculation of how much money you will need to maintain a comfortable lifestyle during your years in retirement.

Some essential decisions that you may need to make when planning for retirement include:

- Many people near retirement choose to allocate some of their retirement money in an annuity. Annuities are offered by Insurance companies and sold through licensed agents. The goal of an annuity is to provide you with a prearranged, dependable income stream. Annuities are very similar to bank CDs. Just like banks, insurance companies offer different rates and returns on annuity investments. Payments could be set up for weekly, monthly, quarterly, semi-annual or annual disbursements, or any time interval that suits the investor.

However, annuities offered by insurance companies are complex, relative to bank CDs; consequently, do not buy the first annuity that is pitched to you; shop around before you come to a decision about where to invest your money. A competent financial adviser should to able to help you pick the type of annuity that is best to meet your retirement objectives. He or she can assist you in selecting a service provider of the annuity by means of getting different quotes and discussing the features of the annuities with you.

- Another factor to take into account when calculating how much you will need during tour retirement years is inflation. Odds are, if you are living on a fixed income, that income will have less purchasing power five years from now.

Again, a competent financial planner should be able to assist you in selecting a retirement investment plan that has a better chance of giving your returns that will beat inflation during your retirement years.

- When planning for retirement, be certain to take into account the issue of inheritance and legacy, especially if you have family and relatives. A legacy may be important to you since it highlights your values and what’s most important to you. Seek the advice of an attorney or accountant to set up a bequest with a charitable annuity or a charitable trust that is separate from your estate wishes.

There are many more decisions that you have to make that are essential when it comes to financial planning for retirement and should be considered seriously. Keep in mind that the objective of these decisions should be to ensure that your retirement is comfortable and debt-free for you and for those you love, and it is never too early to plan for your retirement.

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Why I Believe in Holistic Financial Planning and You Should Too

When you engage the services of an Independent Financial Adviser (IFA) you may receive two different types of service, transactional or holistic, in years gone by you probably wouldn’t even be given the choice odds were that the adviser you were dealing with probably only offered one kind of service and that’s what you received. If you have seen an IFA in the past, do you know what type of service you received?

Transactional or Holistic Advice?

Traditionally Independent Financial Advisers, in the UK at least, have offered primarily a transaction based service. “Transaction” doesn’t sound like a nice word, it sounds like the kind of service you get from Tesco, and I bet you are thinking that’s not what I get from my adviser, “we have a good relationship, we exchange Christmas cards and stay in touch, I know I can turn to him/her when I need help.”

Odds are however that you are receiving a transactional service, let me tell you what a transactional service is so we can see if that is what you currently receive. In a transactional relationship, you have a problem, concern or issue and your adviser pops a long and helps you work out or resolve the matter usually by finding the best financial product available to take care of it. Then you will go back to exchanging Christmas cards etc. until you need help again, or the adviser makes a note to get back in touch when your policy comes up for renewal or some other key event like the end of a deal he arranged for you. Does this sound like your adviser relationship?

Now don’t get me wrong, I have no problem with offering transactional based financial advice the majority of my clients, many of whom I now consider friends, come to me on a transactional basis they have a problem and I solve it everybody is happy.

But there is another way, holistic financial planning, the key word here being planning. When you get holistic advice your adviser takes a big picture view of your finances and your personal goals and aspirations, he or she deals with the issues a transactional adviser would but in the context of the “bigger picture”. When it’s over the adviser and you will agree a schedule for him or her to return so that you can carry out financial reviews that are not based around solving a problem or selling you a new plan or policy, at these reviews the adviser will give you advice on issues that will often be ignored by a transactional advice process, for example which funds your company pension plan should be in, a transactional adviser will rarely give you advice on something like that as they wont receive a commission from your employer, and there is no possibility of a product sale, so they would have to charge you a fee just for that.

If holistic advice is so good, then why do people still opt for a transactional service?

I have pondered this one for quite some time, firstly I think that there are a large proportion of people who either don’t realise that holistic advice exists as an alternative, or they think that they are already receiving it.

I also think that engaging an IFA to come and see you at regular intervals is perceived as something that only the very rich can afford to do, when in reality it is not the case at all. Added to this of course many people don’t actually want to deal with their personal finances but prefer to wait until an actual problem appears before they do anything!

What are the big advantages of going down a holistic planning route?

There are a number of common sayings that cut straight to the core of why I believe in the long term everyone would be better off taking a holistic approach to the their financial planning, “Failing to plan is planning to fail”, “It pays to plan ahead. It wasn’t raining when Noah built the ark.” and my personal favourite “If you don’t have a plan for yourself, you’ll be part of someone else’s” There is a reason that saying’s like this fall in to common day to day language, it’s because we all know they have truth in them whether we want to admit it or not. Think about it does a General ever go in to battle without a plan? Does any business big or small ever succeed without a business plan? Why should the long term financial security and well-being of you and your family be any different? As Thomas Edison said “Good Fortune is what happens when opportunity meets with planning.”

I know what you are probably thinking, I don’t really have enough money or income to need holistic planning this sort of thing is for rich celebrities and not for little old me. Well think about this, income is not the be all and end all of financial planning, if you doubt me on this just think for a moment about people you know in your own life maybe they’re a little older than you are now, but they’ve worked in similar kinds of pay brackets as you do, and they are comfortable financially maybe more comfortably off than you are, maybe they’re thinking about retiring early or they have a couple of holidays a year. Do you think they got in to that position by accident, or do you think they arrived at this position because they have taken care of their finances over the years?

If income were everything we wouldn’t have an endless list of celebrities with mega incomes going bankrupt, go on Google “bankrupt celebs” and see what you come up with. I found this little list, Kerry Katona, Stephen Baldwin, Gary Coleman, George Best, Larry King, Marvin Gaye, MC Hammer, Toni Braxton, Don Johnson, Henry Ford, Meat Loaf, Michael Barrymore, Mike Tyson, Bill Roache, Burt Reynolds… the list goes on and on. All of these people have or had mega incomes but things still went wrong for them many of them learned hard lessons and went on to make it all back. Donald trump for example who had to put his Casino business in to bankruptcy in 2004 has said “I plan for the future by focusing exclusively on the present.” that quote more than any other I have come across sums up holistic financial planning, plan for what you want in the future based on what you have now!

In the end if you want your financial adviser to come and see you to make the best of your available resources to help you achieve your long term goals and work with you to regularly review the situation and help smooth any bumps in the road, without needing to sell you something to cover the time they spend doing, then holistic financial planning is certainly the way you should go.

If you would like to discuss anything in this article then please feel free to get in touch.