Retirement Planning
Content
Retirement Planning - Concepts and FAQs
What is Retirement Planning?
Retirement Planning is the process of planning for financially independent life after an individual retires from work. One of the stages of life which requires careful planning is retired life. In fact, achieving what is anticipated in retired life is the most difficult part of financial planning in today’s scenario. One can even decide on when one wants to retire is careful financial planning is done.
Objectives of Retirement planning
Maintaining pre-retirement style of living Financial independence Minimizing Taxes Early Retirement Wealth Transfer Improved standard of living in retirement
Types of retirement plans :
1) Defined benefit plans It is a kind of plan which specifies the benefits each employee receives at retirement. In most of the plans the benefit is stated as a percentage of pre-retirement salary, which is payable for the remaining life as a regular payment or a lump sum on the date of retirement. 2) Defined contribution plans It is also known as money purchase plans. Retirement benefit plans can be structured in such a way that, some part of salary can be set aside every month /year either by the employer alone or by the employer and employee together or by employee alone. 3) Hybrid (Defined Benefit + Defined Contribution) plans: In addition to the above two stated plans there is a third plan too which is combination of both of them and is very rare in nature. In such plans, both the ends i.e. the rate or the amount of contribution to be made to the beneficiary is fixed.
FAQs
When should I start planning for retirement? It is advisable to plan for your retirement once you start earning. But, the ideal age to start for your retirement planning is around 35-40 years. How Much Should I Save for Retirement?
It depends on your way of living and other costs like: cost of living, proposed life expectancy, Medical bills, Health needs, Travel expenses etc. One needs to consider inflation and other economic aspects also before arriving at a particular figure. Does everyone need a retirement plan? Absolutely - regardless of someone's personal savings or income levels, it is important to start with a retirement plan. A plan allows you to take action now, which can mean the ability to accumulate more retirement income in the future. What are some of the common mistakes one makes while planning his retirement? * Miscalculating his retirement age * Miscalculating his day to day expenses * Not taking inflation into consideration * Overburdening oneself with debt. Is inflation an important aspect while making a retirement plan? Absolutely, inflation is an important aspect which is to be considered as the value of money changes over time.
What is Retirement Planning?
Retirement Planning is the process of planning for financially independent life after an individual retires from work. One of the stages of life which requires careful planning is retired life. In fact, achieving what is anticipated in retired life is the most difficult part of financial planning in today’s scenario. One can even decide on when one wants to retire is careful financial planning is done.
Objectives of Retirement planning
Maintaining pre-retirement style of living Financial independence Minimizing Taxes Early Retirement Wealth Transfer Improved standard of living in retirement
Types of retirement plans :
1) Defined benefit plans It is a kind of plan which specifies the benefits each employee receives at retirement. In most of the plans the benefit is stated as a percentage of pre-retirement salary, which is payable for the remaining life as a regular payment or a lump sum on the date of retirement. 2) Defined contribution plans It is also known as money purchase plans. Retirement benefit plans can be structured in such a way that, some part of salary can be set aside every month /year either by the employer alone or by the employer and employee together or by employee alone. 3) Hybrid (Defined Benefit + Defined Contribution) plans: In addition to the above two stated plans there is a third plan too which is combination of both of them and is very rare in nature. In such plans, both the ends i.e. the rate or the amount of contribution to be made to the beneficiary is fixed.
FAQs
When should I start planning for retirement? It is advisable to plan for your retirement once you start earning. But, the ideal age to start for your retirement planning is around 35-40 years. How Much Should I Save for Retirement?
It depends on your way of living and other costs like: cost of living, proposed life expectancy, Medical bills, Health needs, Travel expenses etc. One needs to consider inflation and other economic aspects also before arriving at a particular figure. Does everyone need a retirement plan? Absolutely - regardless of someone's personal savings or income levels, it is important to start with a retirement plan. A plan allows you to take action now, which can mean the ability to accumulate more retirement income in the future. What are some of the common mistakes one makes while planning his retirement? * Miscalculating his retirement age * Miscalculating his day to day expenses * Not taking inflation into consideration * Overburdening oneself with debt. Is inflation an important aspect while making a retirement plan? Absolutely, inflation is an important aspect which is to be considered as the value of money changes over time.
