Financial planning for retirement is the most important task that you need to accomplish some years before you retire. The more you delay financial planning for retirement the more you are at risk for depleting your financial resources.
From the time you start working until the time you retire you keep earning money which you regularly spend in many ways. Money gets spent in daily, monthly or annual expenses, vacations or luxury items that you may buy for your near and dear ones. During the hustle and bustle of life you tend to forget to save for your retirement. Planning your finance early in life will help you avoid a situation where you dont have any financial means to survive after you retire.
When you set out on doing financial planning, first make an estimate of all your expenses that you think you will incur after you retire. You will not be able to plan if you do not estimate how much your expenses would be post retirement. Maintain an ongoing tracker for your current expenses and see how many of these expenses will continue after retirement. Provision for higher amounts on medicines and doctors fees after you retire. If you have already retired, hurry and make a budget for your expenses.
Once you have your estimate ready you will know how much to keep aside for saving each month for the purpose of retirement. You can also take out a portion of your savings to form a corpus that will help in forming your retirement fund. Make sure that your retirement fund is invested in the safest possible manner, to be used only after retirement.
You can also include income from Social Security as a part of your retirement fund, if you are eligible for one. In case you do not have a Social Security plan, get one so that you can add the income to your savings for retirement. Try and include as many sources of income to minimize the effect on your savings. Pension from an erstwhile job or regular payments from an annuity are sources of income that you must not forget to include.
The amount that you will need to keep aside for your retirement will be equivalent to the difference between the amount that you receive from your Social Security, annuities, pension and any other sources of income and your estimated expenses. The bigger the difference the better off you will be. In case the difference is small then you need to plan some more income or look at reduced expenses after you retire.
If you do good financial planning you can have a happy retirement period bereft of any worries. It all depends on how well you prepare and save for a rainy day.