Like many of us, you may dream of the day when you can stop working and enjoy a comfortable retirement. But, are you prepared for it? This checklist provides you with some important choices to consider becoming financially wiser and making better decisions through your working years and your retirement years.
1. Save More.
Most people do not think about financial matters from a long-term perspective so they do not estimate how much money they will need for retirement, or if they do, they vastly underestimate how much they will need. So, to be on the safer side, make all attempts to save more! Read Retirement Planning – Start now, Save more, Retire rich
2. Accept that you will probably live longer than you expect.
Individuals are expected to manage their own retirement funds. Many will plan for the average life expectancy, not realizing that this means that half of the people will live longer. Women, especially, run the big risk that they might outlive their savings.
3. Learn about various sources of retirement income.
Workers misunderstand what their primary sources of income will be in retirement. India lacks the Social Security, which is the most important source of income for many people in US. So, you are on your own to manage your retirement income. Just having investments is not enough. You need a steady source of income post retirement. Before retirement many people tend to vastly underestimate the importance of planning for these sources of regular income.
4. Learn how to manage your retirement savings plan.
Due to the growth of retirement savings plans such as Insurance, ULIPs, Annuities, etc, individuals are now responsible for managing their investments. Most individuals lack basic financial knowledge but need to become experts about retirement benefit plans. Know more about your Retirement benefit plans.
5. Look for good advice.
A significant portion of retirees and pre-retirees do not seek the help of a qualified professional Yet, while they indicate a strong desire to work with a professional, most ask friends and family for investment advice. Do not shy away from good and comprehensive financial advice. Read this article if you need help on how to choose a financial planner.
6. Don’t count on working.
Plan early! Many workers will retire before they expect to, and before they are ready. Nearly four in ten people retire due to poor health, caring for a family member, or job loss. Build your retirement nest as early as possible. Retirement is not as distant as you thought it to be. Don’t panic! Read on to know how to do effective retirement planning.
7. Deal with inflation.
Inflation is a fact of life that individuals usually deal with through pay increases. After retirement, it is up to people to manage their own assets, or secure guaranteed income. Few people have the skills to manage income to keep up with inflation. The secured small savings investments might not be sufficient for you to keep pace with inflation and provide an all encompassing financial security. Look for asset classes that will provide better post-inflation returns and keep a track of your return on investment.
8. Face facts about medical care.
Many people underestimate their chances of needing long-term medical care. Medical insurance has gained its popularity with a large section of our society, however, relatively few people own medical insurance that is sufficient to cover long-term medical care situation. Are your finances geared for medical emergencies?
9. Provide for a surviving spouse or dependent family member.
Many married couples fail to plan for the eventual death of one spouse before the other and the resulting drop in income. So, you need to take into account not just your lifespan but also the life spans of all your dependent family members. Ensure that you have adequate life insurance cover.
10. Make your money last for a lifetime.
People often pass up opportunities to get a lifetime pension or annuity, failing to recognize the difficulty of making money last for a lifetime. People say guaranteed lifetime income is important, but in practice they usually choose a lump sum withdrawal from their investments or annuity plans. Due to this, they compromise on the entire series regular of future income.