Retirement Planning, Retirement Investment

Retirement planning requires wise investment of a nest egg during your working life in order to live comfortably during retirement. A survey published by the National Foundation for Credit Counseling in April 2009 indicates that a third of the Americans surveyed had not saved anything in the past year for retirement.

Retirement planning requires wise investment of a nest egg during your working life in order to live comfortably during retirement. A survey published by the National Foundation for Credit Counseling in April 2009 indicates that a third of the Americans surveyed had not saved anything in the past year for retirement. The survey also found that while spendinghad reduced against the backdrop of the global financial crisis of 2008, about 45% of the people surveyed considered their thrift behavior as temporary and planned to revert to their old spending habits once the economy improved.

Almost a third of US citizens do not plan for retirement and enter their retired life with little or no wealth. However, it isvery important to begin retirement planning early. Retirement planning takes into account:

• Inflation: As inflation can erode the value of money, it is important that your retirement investment is planned to make the returns inflation proof.

 

• Greater life expectancy: Life expectancy has risen globally, resulting in an increase in the number of years post retirement.

 

• Medical emergencies: Unexpected medical events warrant the need for more money.

 

• Personal financial goals: Establishing concrete financial goals also requires obtaining precise figures that reflect future changes in expense.

There are several options in retirement planning, which include market-linked investment options and those providing flexible income and insurance cover. This provides the investor greater control over his investments to customize plans to his needs.

Retirement planning also depends on age and market conditions. That is, investment options for a 25-year-old investor aredifferent from those for a 40-year-old investor. Retirement planning is not a onetime exercise. This plan should be tracked regularly to determine progress and make changes, if necessary.

 

Retirement Planning: Benefits

The advantages of retirement planning include:

• Avoiding a dramatic hit to your lifestyle post retirement.
• Providing financial protection to your dependents.
• Most retirement accounts offer you significant tax benefits.

 

Retirement Planning: Disadvantages

Here are the disadvantages of retirement planning:

• Curbing current consumption.
• May lock in funds for a period of time.
• May have to forgo the possibility of earning higher returns for achieving security of returns.