How to Love Your Retirement: The Guide to the Best of Your Life

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How to Love Your Retirement: The Guide to the Best of Your Life

Retirement Calculators

A retirement calculator is one of the most useful things you can use when planning your retirement savings. You see most people plan for retirement without any idea of how much they need to save, or how much they want in retirement. A retirement calculator provides the answers.

A retirement calculator shows you how much to need to save to get the income you need when you retire. Or it may be how much you want! That depends how much you are making, and how young you are. Either way do use a retirement calculator.

You can find a retirement calculator on many web sites, so you do not need to get the services or a retirement planner or investment advisor to find the answers. In this way, you use the retirement calculator, calculate the amounts you need, and then visit an investment advisor or retirement planner.

To decide how much you need to save, you need:

1. The income you need to live on at today’s prices
2. The rate of inflation per annum between now and the retirement date.
3. The rate at which your fund will grow.

Let’s go through these and how they relate to a retirement calculator. First, how much do you need to live on? Remember, that retired people do not normally spend as much as people who work. When you retire, you won’t need:

special clothes for work the sort of car that keeps you up with the Joneses
you will be able to take holidays at off-peak times
and you will have time to do things – instead of paying to get them done.

So your costs will be lower. So let’s say you are earning $60,000 a year now, you might think that $50,000 would be enough. Next you need to remember that if you are healthy, you expect to live for 15-20 years, and so need to allow for inflation in that period – so actually you need more! This is where a good retirement calculator comes in.

2. The next thing the retirement calculator needs is the rate of inflation, or what you expect it to average until you retire. With the price of oil going up, we know that inflation over the next decade will be higher than it is now. Official figures put inflation at around 2-3%, but the true figure is more like 5%.

This means that you need to allow for at least 5%, and probably 7% and feed that into the retirement calculator.

4. At what rate will your retirement plan grow? A difficult one this. Five years ago, people were talking in terms of 10%, but not now experts suggest a lower figure. The problem is that a retirement fund or retirement plan has to be prudent – you don’t want to wake up one morning, a year or before you retire, to find that a crash on Wall Street has cut the value of your fund by 30%. You just won’t have the time to get that money back.

So you will be doing well to get 10% return, but could almost guarantee 5-6%. Maybe 7-8% would be a realistic figure to put into the retirement calculator.

The retirement calculator is just some software set up to make a calculation after you enter some figures. As I said earlier, the retirement calculator needs:

Required income
Inflation
Expected return
And of course, how long till you retire.

Here are some results from a retirement calculator:

Required income: $30,000 per annum
Years till retirement: 15 years
Annual inflation: 2.5% (unrealistic)
Annual yield: 5%

Income needed in 15 years: $43,448
Required value of retirement plan in 15 years: $825,000

Quite a lot of money for a modest retirement income. Here’s another one:

Required income: $30,000 per annum
Years till retirement: 20 years
Annual inflation: 5%
Annual yield: 8%

Required value of retirement plan in 20 years: $987,573

If you want an income of $45,000 when you retire – equivalent to less than $30,000 today – you will need: $148,000.

When you use a retirement calculator, make sure you use one that does calculate the income you will get at retirement adjusted for inflation – over 20 years, you will need 50% more than think you need today. If you do this, then you will benefit form using a retirement calculator.

Retirement Planning: Plan your Retirement for Income Through Mutual Fund Investment

Most of the people I have met have not planned for their retirement as they say ‘future is unpredictable and we need to live in present’ but my dear friend’s future is the outcome of present, our present will decide our future. When we think of retirement we generally think of old age, a period when you have to give up the job and sit at home doing nothing. Contrary to the fact, most of the retiree lives a very active life. We need to seriously consider out planning towards retirement because once we retiree our income stops coming but our expenses remain as it is and in some cases it rises with the rising inflation.

In this regard mutual fund has turned out to be the right answer for making retirement planning easier and safer. Mutual fund being managed by professionals is a key to effective retirement planning.

Some people like it. Some people don’t but the fact is that retirement is a reality for every working person. Most young people today think cannot think of retirement as reality as they believe in ‘living at present’. However, it is important to plan for your post-retirement life if you wish to retain your financial independence and maintain a comfortable standard of living even when you are no longer earning. This is extremely important, because, unlike developed nations, India does not have a social security net. In India people still depend upon bank savings and fixed deposits for retirement purpose, which is unfortunately inadequate.

Retirement Planning acquires added importance because of the fact that though longevity has increased the number of working years haven’t, so you end up spending the last phase of your life without earning.

In simple words, retirement planning means making sure you will have enough money to live on after retiring from work. Retirement should be the best period of your life, when you can literally sit back and relax or enjoy your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. To achieve a hassle-free retired life, you need to make prudent investment decisions during your working life, thus putting your hard-earned money to work for you in future.

With the special features of mutual funds like Systematic Investment Plan, Systematic withdrawal plan, systematic transfer plan in addition to other unique features of different funds, the investor can easily plan for its post retirement requirements and ways to achieve it.

Unlike many other countries of west, in India we do not have state-sponsored social security for the retired people. While you may be entitled to a pension or income during retirement, but will it be sufficient post retirement.

Although the compulsory savings in provident fund through both employee and employer contributions should offer some cushion, it may not be enough to support you throughout your retirement. That is why retirement planning is extremely important for every one. More over with mutual funds the investors can actually plan for themselves and also achieve their planned objectives. As compared to direct equities this option of mutual fund is much safer for planning your retirement corpus.

There are many reasons for the working individuals to secure their future emergence of separate families and its attendant insecurity, increasing uncertainties in personal and professional life, the growing trends of seeking early retirement and rising health risks are among few important risks. Besides falling interest rates, also the sustained increase in the cost of living make it a compelling case for individuals to plan their finances to fund their retired life.

Planning for retirement is as important as planning your career and marriage. We need to take conscious and careful decisions to prepare for our retirement. Life takes its own course and from the poorest to the wealthiest, every one gets older with time. We get older every day, without realizing. With our coming old age we tend to become more understanding to the facts of life and realize the importance and impact of retirement. The future depends to a great extent on the choices you make today. Right decisions with the help of proper planning, taken at the right time will assure smile and success at the time of retirement.

In my words, retirement planning means making sure you will have enough money to live on after leaving your work. Retirement should be that period of your life, when you can sit back and relax. Retirement should bring more of enjoyment in your life by reaping benefits of what you earn in so many years of hard work. But it is easier said than done. Most of the people live their worst life during retirement. To achieve a hassle-free retired life, you need to make right investment decisions during your working life, thus putting your hard-earned money to work for you in future. If you are not very aware of the investment that you need to undertake then you can easily take help of online advisers to help you with your retirement plan through mutual funds. The earlier you start the better it is for you.

Now retirement planning can be done with a single click and with the advice of a registered mutual fund advisor by Association of mutual funds in India (AMFI). Fill this retirement questionnaire to know your current financial situation and your investor profile which will help you plan for a worry-free retirement.

This is a no obligation free mutual fund advisory; investors can make informed mutual fund investment decisions with the expertise of our advisors.

Start Squirreling Away Funds For Your Retirement

Investing for retirement is not something everyone does ahead of time. Many people do not get started because they feel that their retirement is several decades away and they can get to it in good time. Almost everyone under estimates the resources, mainly cash, that are required to retire with a certain quality of life. With better health management and medical technology, many people are beginning to live beyond the previous general estimates for human life spans. The result is that many people run the risk of running out of money before their time is up.

Since few people are motivated in investing for retirement early enough, it has become a serious issue for governments in many developed countries. In some of these countries their welfare systems are straining from the demands put on them by the growing numbers of elderly living beyond the estimates of previous human longevity models. In these countries governments have warned their citizens that their social security systems may not have enough funds to go around.

In order to face our retirements more confidently, it has become necessary for us to not rely on state-sponsored programs; but increasingly on self-managed initiatives.

Key Issues Regarding Investing For Retirement

Investing for retirement requires us to prepare a retirement plan early – the earlier the better. Unfortunately, when you are young it is very difficult to imagine life as a retiree. What can we do? Perhaps we should initially discuss it with our parents. Many of them would have experienced the positive and negative elements of investing for retirement. Next you may wish to a financial planner. Do not commit to any investments until you feel that you have done enough research, clarified your doubts, identified your key goals and estimated what portion of your salary you are prepared to save for the long-term.

During your discussions with your financial planner regarding investing for retirement, you are likely to be surprised how much you will need to set aside for the golden years when you would have stopped working. Many people tend to extrapolate their planned savings linearly and find that achieving their investment goals are near impossible. Your financial planner should be able to enlighten you regarding some essential concepts of investing like the time value of money, the effect of compounding interest, the benefits of a diversified portfolio with a spread among asset classes with varying risk and return profiles and pre-tax investment programs made possible by your employer or government.

When you have done sufficient research, understood key investment concepts and got sound advice from your financial planner, you will realize that if you start early enough and do the right things, you should be able to retire rather comfortably with sufficient funds to last your lifetime. Investing for retirement is not difficult if you start sufficiently early and act on sound financial planning advice.

The Advantages Of 401k Retirement Plans

A 401k retirement plan allows a worker to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. Many people today are relying on 401k retirement plans to support their needs during their retirement. The funds from this retirement plan can be used to pay regular bills and in some cases if the funds are substantial, help us retire in style and luxury. In these uncertain times fraught with economic and political uncertainty and health scares, it pays to plan ahead for our future when we may not be economically very productive by saving with a 401k retirement plan. The 401k retirement plan is a flexible program that has substantial benefits for retirees.

Of all the advantages of a 401k retirement plan, they key advantage are the tax benefits. Companies you work for are responsible for creating and designing the plan. Some companies may restrict the amount set aside to match what the employer sets aside.

The tax benefit arises from the fact that you will only be taxed on the remaining amount of your salary after the savings into the 401k retirement plan. The return on investment from a 401k retirement plan may be higher than many other competing retirement investment plans. The flexibility advantage is that you may transfer the funds from the retirement fund initially setup with your former employer into the new employer’s 401k retirement plan. You may also choose to transfer the funds to a personal 401k retirement fund account.

Use Your 401k Funds To Build A Diversified Financial Portfolio

The 401k retirement fund plan is to a large extent a self-directed investment program. You can choose to assign the funds into a wide variety of financial assets like stocks, bonds, money market investments, mutual funds or some of them. You can choose to re-allocate the funds among these investment choices at any time. It is critical to get some information and advise regarding these financial instruments if you choose to invest and re-allocate the funds yourself.

Saving and investing with a 401k retirement plan is a great way to ensure that you have sufficient funds to live on long after your retirement from full-time employment. The funds can be withdrawn if they are needed in the event of an emergency. If necessary, you may also take out a loan against your 401k retirement funds. This should only be done after much careful thought and consideration. The funds in your 401k retirement plan are for your retirement. If you squander the money, you will just be postponing your agony into the future.

How can you get retirement when your employer does not offer it?

My husband has no retirement plan with his employer and are there companies out there retirement companies that offer plans for the individual. If so, then what are some good companies to have a retirement plan through.