Planning your own retirement can indeed be a daunting task. But it will be worth the effort if you if at the end of the day you are able to achieve your retirement goals. The five steps guide to the retirement planning process listed in the following paragraph may help to direct you towards your retirement goals.
1. Firstly, decide at what age you would wish to enter into semi-retirement and later full scale retirement. Estimate the length of your retirement period by computing against the present average lifespan for your gender. This can be done by checking the mortality tables provided by most insurance companies.
2. The second step is to identify your other financial needs such as tertiary education for your children, your dream home, etc. This will help you to estimate the financial quantum you required.
3. Carry out a net worth analysis of your present assets and liabilities followed by a cash flow statement analysis. If you are in an enviable position, you could move on to the next step to commence your investment planning to achieve your financial needs identified in step 2. Otherwise, you would need to draw up a debt management program to clear off all outstanding debts and start saving until you have a 6 to 9 months buffer for your daily expenditure before starting on your investment planning.
4. Step 4 includes knowing your investor’s risk profile. This step also includes educating yourself on the different investment options available. Otherwise you may engage a financial planner to draw up a long term investment program for you. Understand that to ensure the value of your hard earned savings is not beaten down by inflation and to achieve your retirement goals, investment risks has to be taken to ensure a superior rate of returns. This can be done by investing in investment vehicles such as a mutual fund.
5. The fifth step involves carrying out an insurance needs analysis. You will never know what happens tomorrow. Insurance is a wonderful tool to utilize to manage your investment risks until you achieve your financial goals.
The 5 steps guide to retirement planning process stated above are the basic fundamental procedure that you will need to follow. It will certainly require some discipline and sheer determination but like the saying goes, everybody will have to retire someday whether they like it or not. Hence, planning your retirement is a necessity rather than an option to ensure that you have enough in your retirement nest to see you through old age and quality lifestyle in your retirement years.