Last updated on December 26th, 2016 at 11:25 pm
Today the word “retirement” is being somewhat misused and falls short of properly describing exactly what life looks like for people in their 50s, 60s, 70s and beyond. Life was a lot simpler before the industrialization of various Western democracies for older people. People lived on the farms and older people’s responsibility was to teach the next generation how to farm and in return those sons and daughters provided care for the elderly. Saving for retirement was not a part of life, as it is today for many of us. These days it is crucial to come up with a good retirement income planning so that you can retire happily and hopefully stress free. When you add up today’s long life spans, economic uncertainty and the prospect of inflation, the need for sound financial planning is more important than ever.
There are two factors that must be considered in order to come up with effective retirement income planning: Personal planning and financial planning.
Many people nearing the age of retirement focus too much on the financial aspects of their retirement but don’t spend enough time thinking about how they want to spend their retirement. In fact, it is very difficult to plan for your finances if you don’t consider your personal goals of retirement. Do you plan to volunteer for an organization? Are you planning on starting or continuing any hobbies? Are you planning on travelling to places you’ve never been? All of these goals must be considered before you begin your financial plan.
Now that you know what your personal goals and plans are, you can prepare a more comprehensive financial plan that is more likely to support the kind of retirement you’ve always dreamt of. Your income will most likely come from three sources: personal investments, government pension, and employment-related programs.
In order to make sure that you create a financial plan that sustains your personal one, follow these steps to retirement income planning:
1) Identify & compare your income and expenses to determine any shortfalls or surpluses. Make a list of things you can save on to help lower expense and try to cut back on nonessential expenditures.
2) Review & analyze the various retirement income strategies. For example, your house might yield the biggest retirement income so make sure to keep it in good shape. It could be your most important investment for the future. Put more money into RRSP’s and/ or segregated funds.
3) Review & compare the retirement income options available. Perhaps you can work part time when you retire and make some money for the day to day expenses.
4) Develop an action plan. Most importantly, meet with a good financial adviser who can help you quantify your longevity risk and choose investments that will ensure you a steady flow of income to meet your ongoing needs. An experienced financial planner can also recommend certain guaranteed products that have features designed to meet your particular needs.#lifestyle | #savings