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.