5 Things You Should Do to Prepare a Retirement Plan
These days we can expect to live in retirement for twenty or thirty years — that’s almost as long as we spend working. It makes sense then to do something about preparing for this time of life. As Mark Twain said: “Plan for your future that is where you are going to spend the rest of your life”. Here are five things you should do to prepare a retirement plan.
Decide on the age you want to retire and the sort of income you expect to live on. Make an early start on your planning and think about your life after retirement including the way you want to live your life, where you want to live, how you want to spend your time and who you want to spend it with. Generally most people will live on up to 75% of their pre-retirement income. The lower your income, the higher the portion of it you’ll need to replace.
Start investing. The younger you are the better, but it’s never too late! If you’re in your 20s or 30s this is good time to start. The power of compounding is incredible. The longer the time you have to let your money compound, the more it grows. The shorter time for investing the more you need to invest. Make a start with your 401k or KiwiSaver.
Review your insurances. Your insurance needs will change as you age, just as your financial priorities and responsibilities change. Change your policies to suit your changing lifestyle. This includes your life, health, homeowners, and car insurance. Life insurance may not have the same need it once had but health insurance will become more important as you become more susceptible to health problems. Although you may have repaid the mortgage by the time you retire do not give up homeowners insurance. Your home is usually your single biggest investment so its loss would affect the secure retirement you’ve worked for.
Make sure you have an emergency fund. You need to set aside enough funds for unexpected costs. Having a buffer will ensure that you avoid using savings set aside for income and growth purposes. The rule of thumb is to have about three to six months worth of expenses for your emergency fund, or if working, three or four months worth of salary. Having your emergency fund in place will take the worry away and give you less stress to deal with. Your emergency fund should be in a call account so that the funds are available when you need it.
Review your Will, Trusts and Powers of Attorney.Everyone should have a will even if you don’t think you have enough assets to worry about. Make sure that you and your beneficiaries are appropriately protected. You will need to seek the services of a professional to review your estate plan.
Retirement Fund
Whatever age you are, planning for your retirement is important. Prepare a retirement plan to make sure you can live a comfortable and stress free life after work.
5 Things You Should Do to Prepare a Retirement Plan
Lyn Bell has been in the finance industry for more than 30 years and is a Certified Financial Planner. She has helped many clients achieve their financial goals. Sign up to get Lyn’s free newsletter SoundFinance News and receive a free gift.
Please note this article does not contain specific advice and is for information/education purposes.
A disclosure statement is available free on request.
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