Kobus Kunz – Head of Consulting, Efficient Benefit Consulting
Retirement planning is the process of setting retirement income goals and the actions and decisions necessary to achieve those goals.
What do you need to include in your comprehensive retirement plan? You need to:-
- Identify your sources of income,
- Estimate your expenses,
- Implement a savings program, and
- Manage your assets and risks.
A comprehensive retirement plan is about how you structure your financial plan to accommodate these four key aspects. It is also a way to guarantee that you receive an income once you retire and, ideally, a way to maintain access to some wealth so that you can enjoy the retirement that you dream of.
Nobody wants to work all the way to the end. Even if you work part-time, it definitely will not be enough to support your current lifestyle. Here are a few points why retirement planning is important:
- Independence at retirement: Saving for retirement means that you will not become dependent on your children, the government, or anyone else when you retire
- Maintaining your lifestyle: The cost of living increases due to medical inflation and the likelihood that you will require more medical care. Saving for your retirement means that you can prepare for these increases while still enjoying the life that you have imagined for yourself.
- Contributions reduce your taxes: Your monthly investments towards retirement could reduce your taxes, which puts extra cash in your pocket now.
- Young Adulthood: Those who are entering adulthood may not have a lot of money to invest, but they can have enough time to let investments mature. Starting as young as you can will make a critical and valuable difference when it comes to your retirement savings. Investments are a good way to earn some compounded interest to benefit your retirement income.
In our next instalment, we will be looking at the four different types of long-term retirement vehicles that you can use to plan efficiently for that dream retirement you deserve.