Post #1 – The Necessity of Retirement Planning
With the decline of old fashioned company defined pensions, an insolvent social security system, and the recent decline of housing values, it is important for everyone to pay more attention to their retirement and investment planning. That is, if you plan on ever retiring from your full time work. In fact, it is imperative that you do proper retirement planning even if you do not plan to retire. You may want to continue working, but in today’s turbulent world, whether you continue working may not be your choice. Therefore, retirement planning in today’s world is more important than ever. You may have heard of the term “Ownership Society.” What that really means is, today, when it comes to retirement, you are “on your own.” I cannot stress enough the importance of taking responsibility for your own retirement. Whether you have a pension coming or not, everyone should take their retirement planning seriously. One thing we can all be sure of, there will be no bailouts for older Americans who have not planned for their own retirements.
Good retirement planning starts with a customized retirement plan. This is important because everyone has different financial goals, needs, and a time-line for retiring. If you are 30 years old with small children your retirement plan will be very different from someone who is 50 years old with adult children on their own. Also everyone has a different age when they would like to retire and has a different view of what their retirement lifestyle will look like.
A retirement plan is about developing a detailed strategy that allows you to reach your financial goals however still allows you to enjoy an acceptable lifestyle while you are working. When developing a retirement plan, you will quickly come to realize that your retirement strategy is about determining the trade-off between your lifestyle during your working life, the lifestyle you want in retirement, and the time-frame it takes you to reach your financial goals. For example, if you plan to have a lot of expensive hobbies in retirement like traveling to foreign countries, joining a country club, owning a 50 foot sailboat, and maintaining multiple residences, you will require much larger retirement assets than someone who just plans to stay close to home, garden, and join a weekly bridge club. The specific plan and time-line to support these two retirement lifestyles will be very different.
Regardless of your age and knowledge level, I recommend that everyone go to a “fee only” financial planner (a fee only planner is one that gets no compensation from any source other than the fee their client’s pay them). Whether you hire a financial planner or not, you should develop a written financial/retirement plan. Many studies have shown that people who write down their goals accompanied with detailed steps of how to reach the goal, have a much greater chance of achieving that goal.
In future blog posts, when discussing ideas, concepts, and strategies regarding retirement planning, I will touch on several areas that everyone needs to consider when developing a retirement plan and give you some perspective on what the choices you make will mean to your retirement. I will also bring these ideas and concepts together in a consolidated approach to retirement that will be simple for anyone to implement.
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