Ten Major Considerations for Retirement Planning

Posted by animesh on June 21st, 2017

Planning for retirement is often like trying to catch lightning in bottle. Who can really know what the future may bring? However, having a plan that is consistently followed has been proven to leave retirees better off than those who decide to wing it financially. So, here are some things to consider when planning your retirement.

• Are you currently saving enough for retirement? Should you be saving more?

• What is your time horizon for retirement? Are you being realistic in your time frame based upon the resources you have now? Could you retire earlier and still be comfortable? Would working a year or two more provide a tangible difference in lifestyle?

• Will your mortgage be paid off before retirement? For many families, the mortgage payment is their biggest monthly expenditure. Having it off the books before retirement can remove a large financial weight. Who wants a mortgage payment when their income could conceivably be less than it was while they were working?

• Will your other debts be retired when you are? The mortgage may be the largest, single monthly expenditure for households. That does not mean that a combination of other debts is not more significant. Have you factored in paying off credit cards, car loans, student loans, and other short-term debt? Better than that, do you have an actionable plan in place to pay off short-term debt well before retirement?

• How long will you live? People generally underestimate how long their life expectancies. The chances that one person from a healthy, non-smoking couple will live into his or her 90s are very good today. Most financial advisors tell people to plan on needing income at least to age 95. More cautious advisors tell clients to plan on needing income to 100.

• How will you cover health care costs? Let's face it: we generally need more health care as we age. In addition, health care costs have been on a long-term upward trend. Options, such as long-term care insurance, must be considered.

• How will inflation affect your money? Every year, the costs of the goods and services we need increase. We must look at our investments and consider whether they are outpacing inflation, matching it, or trailing it. The long-term rate of inflation is estimated to be 3 percent or 3.5 percent, depending upon which expert you ask. It would be best to stay ahead of the higher estimate.

• What kind of lifestyle will you live? Living large requires large capital. Living well does not necessarily mean living large. Find your place of retirement comfort and aim for it.

• Do you have protection for your retirement plan? Life happens. Illness, accidents, loss of income, disability, medical expenses, and other unexpected events occur. They cost us money and grief. The grief must be handled internally. For the financial losses, there are protections that help us to avoid tapping the resources we have pegged for retirement. Make sure that you have as much protection in place as you can obtain comfortably.

• Are you working with a competent professional to assist you in planning for retirement? There are many financial professionals who could help you tailor a plan based specifically on the things you know you cannot live without during your retirement years. Perhaps, it would benefit you to find one who provides excellent service and discuss those important retirement must-haves.

We have explored ten major considerations for retirement, but the list is not exhaustive by any means. Retirement Planning is a major event that should not be taken lightly. This article should be used as the beginning of the retirement discussion- not the end of it.

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