Retirement planning is the planning one does to be prepared for life after paid work ends, not just financially but in all aspects of life. The non-financial aspects include lifestyle choices such as how active you want to be when you reach retirement age, preparing for the transitional impact of retirement from work life with home life, develop new interests to be engaged in retirement life, or staying connected
The process of retirement planning addresses the following:
- Assess readiness-to-retire given a desired retirement age and lifestyle,
- Assess whether one has enough money to retire
- Identify actions to improve readiness-to-retire
- Acquire Financial Planning knowledge
- Encourage saving practices
The emphasis one puts on retirement planning changes throughout different life stages.
- Early in a person's working life, retirement planning is about setting aside enough money for retirement.
- During the middle of an individual's career, it might also include setting specific income or asset targets and taking the steps to achieve them.
- In the few years leading up to retirement, financial assets are more or less determined, and so the emphasis changes to non-financial, lifestyle aspects.
A retirement plan identifies sources of income, estimates expenses, implements a savings program and helps manage assets. Estimating future cash flows and assets is also a central part of a retirement planning.
A number of questions and concerns need to be addressed to help you better prepare for retirement living.
Estimate how long your retirement savings may last using various monthly cash flow rates.
Retirement income may come from a variety of sources. Here's an overview of the six main sources.