The simple truth about retirement income planning is that it is important. Important in the sense that we have to identify and project everything about expenses and save as much as we can if we wanted to live the kind of life we always dreamed for our retirement. You may have a perfect life today and decided to worry about retirement when it is around the corner. If this is what you are doing, you could be in trouble! No one can say retirement income planning is easy. In fact, it is very difficult and requires careful considerations of many things, such as unforeseen expenses, health, and more.
But before you start to worry, let me explain what I meant. What I’m trying to say is that; if, at the present, you have worked so hard to live comfortably and with sense of contentment, did you not think that you are supposed to live like that, or more than that, when you retire? I would say, most definitely! When you reach the point in your life, where in you are no longer physically able to do the things you used to, wouldn’t it be right to just enjoy everything what you have worked for and saved your retirement? Yes, it would and this is exactly the idea why retirement income planning is very crucial.
To be able for you to effectively succeed in doing your retirement income planning, you have to take several steps, such as:
1- Project your retirement expenses
It maybe is hard to identify and project your retirement expenses, especially if retirement is still far off, but still it is essential to take this step to establish your retirement income planning properly. But, always remember that the cost of living will eventually go up.
The common expenses that you must consider include the following:
- § Food and clothing
- § Housing
- § Bills
- § Transportation
- § Insurance
- § Debts
- § Taxes
- § Education
- § Recreation, and many more
2- Decide when you will retire
To determine your total retirement needs, don’t you only have to estimate how much annual income you will need, but also you have to consider how long you will be retired. In other words, the longer your retirement, the more years of income you need to fund it. If you want to retire earlier, say 50, to get the most out of your retirement. You might as well need booming stock market or a generous early retirement package.
3- Estimate your life expectancy
Your lifespan is one thing to consider in determining how long you’ll be retired. Again, the longer you live, the greater the funding is.
4- Identify your sources of retirement income
The nest step to take after you have determined your retirement needs is to assess how prepared you are to meet those needs. You employer may offer traditional pension that pays off your monthly benefits and, of course, you can also count n Social Security to provide a part of your retirement income.
5- Make up any income shortfall
After making your retirement income planning and the result proved that your expected income sources will be more than enough, count yourself lucky. If it comes up short, don’t panic for you are not the only one with this kind of dilemma. This is probably the time where in you will the assistance of financial professionals –retirement planners. They’re the ones expert in helping you out with your retirement income planning to let you enjoy your retirement golden years without financial fears.
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