Retirement is a phase of life that is quite vulnerable regarding the financial condition of workers if they do not have any future plan. On retirement, the salary that is normally received during workdays would not come again. A worker who wishes to be able to enjoy his or her retirement requires good financial planning. Workdays are a good time to prepare the financial provisions or savings which will be used in retirement.
How do you financially plan on getting the savings? Since childhood, people must have been educated by their parents to handle finance responsibly. They prepared us to be able to navigate life by educating the moral, mental training and planning.
Parents give advice that is very useful for life and also sends us to school no matter how high it is as long as they can afford it. Likewise, we have a responsibility to ourselves and also to the family of a loved one, to be able to finance our life during retirement and at the same time fulfill the obligation of parents to children who have not been accomplished at the time we retire.
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To prepare for it, family financial planning is considered important to meet the financial needs such as for paying the education fees for the children who still have to be taken care of, or as a precaution so that our finances are not dependent to our children or relatives.
If you look after the human life cycle then the span of the first 1 to 6 years is childhood. Ages 7-18 are school-age and for those who are fortunate to continue education in college to get a diploma, degree or even completed his postgraduate studies may experience a long period of education. In the age of 22 to 55 years, people have a productive age to work and earn some income. A period of 55 years to 75 years is an average retirement age for workers nowadays. Retirement can last up to 20 years or even more.
From above mentioned period which concerns us in making financial planning for retirement is a time to work from age 22 to 55 years or 33 years of work and retirement from age 55 until age 75 years or 20 years of retirement.
For some people blessed with long life over 80 years of age, retirement could be reached for 25 years or more. Have you thought about how to finance yourself throughout those 20 to 25 years after retirement? Remember that the period is a period of productive work, in this period the family finance needs to be managed properly.
Spending all income you have is the best way to destroy the financial future in retirement. Many kinds of the literature suggest the activities of saving and investing is the best way to prepare for retirement finances. What is the amount of income that must be saved and spent so that we can obtain financial security for our retirement?
Amount of income that must be saved or invested heavily is dependent on the needs of retirement to come. Financial planners typically recommend 20-30% of family income to not be spent during the active period. These funds are to be allocated to savings and investment.
What is the ideal amount of funds saved and how the amount of funds should be invested? Savings and investment scale needed by a person is very diverse levels of income and dependent on the lifestyle concerned. The average retirement savings are different depending on the personality and condition.
Keep in mind that saving is not the only means to prepare for retirement funds. Savings are advised only to meet the needs of an emergency fund. A common scale recommended is 6 months to 12 months the amount of monthly expenditure. Individuals who are more conservative may need even greater savings to meet the sense of safety and security.
Investment plan to support financial planning is more complex than the retirement savings plan. Important element to consider is the number of funds invested and the number of investment returns.
The scale of investment required by a person to make ends meet future retirement should be known well. Suppose that at retirement we need a monthly income of $1,000 per month, what is the value of investment needed? To get that amount of income, you probably need investment funds. There are a lot of investments with average investment returns of 12% per year or 1% per month.
This figure does not take into account the annual inflation rate if the annual inflation rate of 8% per year then the investment should be higher at 20% per year. If you are a worker of bona fide company that provides high wages and still actively working or still have long enough time to retire, you can learn from your seniors.
You can learn to enjoy a successful senior retirement well. On another occasion also learn from the seniors who experience retirement with great difficulty.
In general, workers in the bona fide company gained a lot of ease or well off to forget his service during his retirement financial planning. Or maybe the workers have been trying to prepare for retirement but not being careful on calculations that can lead the planning to fail and again suffered a bitter retirement.
Do not bet on your retirement. Immediately make a financial plan with good insight. If necessary, ask for professional help or certified financial planner to make your retirement finances run well in the future. When is the right time to begin the implementation of your financial preparation for your retirement?
If you currently have ten years before retirement then you have enough financial preparation for retirement, it is not considered too late to do but if delayed much longer then the future retirement financial difficulties will become more apparent. The best time is probably five years ago or 10 years ago or even maybe more than 10 years ago.
Wait no longer. Be careful not to fall complacent with the current favorable conditions.