The Dos and Don’ts of Retirement Planning


The inevitability of retirement keeps us, working folks, on our toes all the time. It doesn’t matter what age group you are or how secure your financial situation is, the mere thought of retirement makes us pause and think. That goes to show just how stressful this topic is. But it doesn’t always have to be that way.

Most experts recommend starting your retirement planning as early as you can. If you start saving for retirement from the time you get your first job, chances are you’ll be able to enjoy early retirement and live comfortably in your golden years. But not all of us are so farsighted. So if you have put this decision off, it’s not too late to start now.

The Right Strategy

Experts who rightly recommend early planning for retirement want you to benefit from compounding. That’s when the interest on the principal amount keeps adding up over the years so that by the time you’re ready to retire, you’ll have a handsome sum waiting for you at the bank. This gives you many options about how to spend your retirement. Whether you want to travel or you prefer to enjoy a comfortable life in senior living homes, your early planning makes either option within reach.

Both the consumer household income and expenditure and price index are constantly moving upwards. Since commodity prices rarely go down, there’s no reason to assume that by the time you retire, the price index will be lower than it is today. So one way to make sure that your savings will always outpace inflation is to save regularly and invest your savings to enjoy higher and steadier returns on investment.

One of the toughest questions to answer is how much will you need by the time you’re ready to retire. Financial experts recommend saving a minimum of 30 percent of your current annual income and setting it aside for your retirement plan. You will want to be precise with these numbers, so confirm the percentages that you plan to save using an online Percent Calculator. This is not an arbitrary figure. It allows you to live a comfortable life now and work toward your financial goals while also building a decent life in your old age.

So how would you go about investing that money that you keep for your retirement? The best way is to diversify your portfolio. As we all know, the stock market is jittery and any unforeseen event could wipe out billions of dollars in the blink of an eye. So, to avoid this unfortunate outcome, select as many financial assets as you deem reasonable and spread your investments among them. That way, if some of them tank or lose value, the rest of the portfolio will increase your profits and offset those losses.

Mistakes To Avoid

Retirement plans, much like every other endeavor one undertakes in life, are not set in stone. You cannot just make your plans and forget about them for the rest of your working years. That’s a rookie mistake that could end up costing you a lot down the line. For one thing, your life goals change over time. Your retirement plan should reflect those changes as well. So you need to review that plan once every 5 years to see if you’re comfortable with the way the plan is going or whether you need to make adjustments.

Another aspect that requires constant reviewing is your investments. Some investments need to be divested, since they have proved to be a liability and haven’t brought the expected results. Other successful investments would encourage you to pour more resources into them to enjoy a higher return. And as you gain more experience in life, you will also use this experience and knowledge to make better investment decisions.

It’s true that you cannot predict the future or know for certain what life will be like 20 or 30 years from now. However, there are guidelines to help you plan your retirement more successfully. One of those guidelines is the higher costs of healthcare among the elderly compared to younger age groups. As we age, our bodies become more prone to health issues, which in turn cost more and more every year. So if you want to enjoy a comfortable life in your golden years, factor in the soaring cost of healthcare and medicine.

And last but not least, you should take control of your own financial situation and investments. It’s one thing to trust a broker or an accountant with your assets, but it’s a different thing not to know what they’re doing with your finances. You should spend some time educating yourself about the ins and out of investing, buying stocks, and other forms of investment you will consider. At the end of the day, this is your money and your future, and nobody will look out for your best interests like you.

When planning for retirement, you should start as early in life as you can. This will give you ample opportunity to increase your funds, compound your principal, and avoid the downturns of the economy. As your goals in life change, you should also review and adjust your retirement plan to keep up with the changing economy. With a diverse portfolio and sound planning, you will reach retirement in good financial shape.