Retirement Planning

November 17, 2008 by  
Filed under Retirement

 

From the Investment perspective a Retirement Planning refers to the process of saving money (while working) to meet your future expenses after your retirement from job. You should start saving money for your after-retirement life right from the time when you start earning money (age of 25 to 30). If you lack a proper savings plan you may have to lead a worst life after retirement due to non-availability of funds to meet your expenses.

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There are a variety of investment options available for Retirement Planning. If you are uncertain in which one to choose you may consult a Financial Consultant who would provide an ideal plan based on your age, pay scale, dependants and future plans. Some of the well known investments for Retirement planning are as follows:

 

IRA (Individual Retirement Account)

An Individual Retirement Account is a personal savings plan through which one could save money for his retirement life. IRA funds can be placed in Bank, Stocks, Mutual funds etc. Contributions to IRA are tax-deductible. There are different types of IRA like the traditional IRA, Roth IRA, SARSEP and Simple IRA etc.

 

Life Insurance policies

There are certain life insurance policies which offer money-back guarantee to the insured. This type of plan offers dual benefits as it offers the assured sum to the insured’s family members or nominee upon his death or if the insured person survives after the policy term he is paid the maturity amount along with bonus. These types of policies are usually for longer periods like 15, 20 or 25 years.

 

401K Plan

401K is a familiar retirement plan where a specified sum of money is deducted by an employer from the employee’s salary and contributed towards the 401K Plan. Contributions are tax-deductible.

 

Pension Scheme

Pension is a sum of money paid regularly to an Individual either by Government or super-annuation funds after his retirement or disability. The pension amount is based on an Individual’s pay scale, contributions and tenure of employment.

 

An Individual needs to be proactive in planning for his future especially for the life after retirement. One should consider the following to prepare a proper retirement savings plan.

 

a)     Current Age

b)    Retirement Age

c)     Inflation Rate

d)    Current Savings

e)     Liabilities

f)     Desired annual income during retired life

 

There are many free tools available over the Internet that can help you to calculate your retirement planning.

 

During your old age it is difficult to avail loans and you can’t always depend on your friends or family members for borrowing money. Hence it is advisable to save money on a regular basis which you could use at a later point of your life without any dependency on others.

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