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Retirement Planning

Article by Alka

Retirement Planning is an essential element of any financial plan. It is a comprehensive process for determining how much money you will need when you retire. It also helps you identify the best ways to save for retirement in your given financial situation. Retirement planning is like an assurance that you will continue to earn a steady income and enjoy a comfortable lifestyle, even when you are not working any longer.

To understand why an increasing number of individuals have already started planning early for their retirement, is that you need your income stream to keep going with rising inflation rate. It is therefore easy to understand why meeting your monthly bills seem more important, especially if your retirement is still far ahead, but, here’s something to think about…. As you move through your life, you will experience and come across many life events that will affect your future financial security such as getting married, starting a family life, buying a house, and sending your children to college and further studies. All these events will affect your ability to plan for your future financial security. If you develop a flexible long-term plan, you will can overcome these obstacles and ensure financial independence in your retirement years with a fixed income flow. It is therefore really important to understand your future needs and requirements. To determine the appropriate percentage of income for your retirement age, you will need to determine if any of your current expenses will change when you retire. Whether your travel and leisure expenditures increase? Whether your job-related expenses for commuting change? or Will you be paying more for medical liabilities? It’s generally accepted fact that many of your routine expenses will change during your retirement years. In the coming years it becomes all the more necessary to determine whether those expenses will increase or decrease, and by how much.

Both living expenses and inflation are important in understanding your retirement needs because you are planning for a period of time, not a point in time. The living costs set to soar, the skyrocketing costs throw even a well-salaried person off the balance, With the rising inflation rate everyday, you can imagine how high they will be when you are ready to retire. Therefore, a proper retirement plan provides you with a income every month, to arm you in the face of rising costs. It is true that a successful retirement plan requires your active involvement and long-term commitment.

Some may like it. Some don’t. But retirement is a reality for every working person. Most of the young people today think of retirement as a distant reality. 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. Retirement Planning acquires added importance because of the fact that though longevity has increased, the number of working years haven’t. therefore, retirement planning is too pressing and long-drawn to be taken up when you are a just few years away from retirement.

You retire from work. Not from life.

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Retirement Plans: Financial Security upon Retirement

Article by Carla Ballatan

Most employees, upon reaching retirement age, anticipate such time when they can totally relax while still enjoying financial security. That’s why even at the very beginning of their employment, they are already looking far into the future about the kind of retirement benefits they might possibly get.

There are formal contracts to provide retirement benefits for employees upon reaching retirement age. They are called retirement plans. Some retirement plans can be set up by the employee themselves while some are sponsored by their employer.

The Employee Retirement Income Security Act or ERISA Law is the federal law governing employee’s retirement plans. Qualified retirement plan is the operative term for the specific plan that complies with ERISA law. By complying with this applicable law, the plan’s taxes are deferred on contributions and earnings of the employee until withdrawn. ERISA has non-discrimination rules and other safety nets to protect employee’s benefits.

Although there are no existing laws that obligate employers to establish retirement plans for their employees, they may provide such packages in order to attract incoming employees and maintain present employees. Aside from that, setting up qualified plans by employers lets them gain tax benefits.

If there are qualified plans, there can also be non-qualified plans. As opposed to the former, non-qualified plans, as the work itself connotes, do not qualify the plan for tax benefits. Such plans are usually set up by employers for their management executives.

There are several examples of qualified retirement plans. The more popular ones are the individual retirement account or IRA. It is a contract by the employee with himself with the purpose of having the money in a tax-qualified account until their actual retirement.

In having an IRA, the employee’s taxes are postponed contributions along with the ensuing earnings until they are withdrawn.

The 401(k) plans, is another type of a delayed compensation plan. An employee can contribute ever year while their employers share a corresponding percentage of what they contribute. Not until the employee start receiving distributions does he get taxed for contributions.

However if the employee starts withdrawing before they reached the age of 59 1/2, he may have to pay up stiff penalties. However, contributions can grow and accumulate until withdrawal, and everything is on a pre-tax basis.

Profit sharing plans, in simplest terms let employees share in the profits. This type of plan gives employers a chance to supplement other retirement benefits for the employee. It depends on the employer how much are the contributions. Employers must observe that the contributions must be on a non-discriminatory basis. Usually employers make contributions according to the percentage of total annual pay roll.

Pension plans have two basic qualified types. The defined benefit plans have a specific pension amount according to a certain formula and the defined contribution plans have a specific amount the employees are required to contribute in individual accounts.

It is essential for an employee to be aware of the retirement plan set up by their employers during their employment. Employees need to understand the plan itself, how it works and what benefits to be gained. Then, they must also keep tabs of their money wherever it is deposited. This way, employees and their families can be assured of their future financial security.

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How Estate Planning Services Help?

Due to the high administrative costs and estate taxes, estate planning services provided by professionals are in high demand. This is because the community does not want their lifetime hard-earned savings not being able to be inherited to their loved ones. Estate taxation could be the major killer with a tax of 45 percent during the year 2007 in United States. As such, estate planning experts can help to systematize a plan to allow you to massively transfer whatever you have to your heirs, without much hassle.

The estate plan will help you to prevent from paying the tax hence maximizing the amount of properties and money to be inherited to your beneficiaries. If you only want several intended heirs to obtain what you wish to leave behind, a proper planning and will are going to help you do so. The professional who have the expertise on tax, estate planning and financial issues will cooperate with you, understanding your demands and accumulating all legal documents including financial information to draft out a potential plan.

With the estate planning services provided by the specialized experts, there are several procedures to go through.

For instance, the initial step will be to have a thorough review of your financial condition then analyzing in correspondence to your personal goals. Usually they will prepare questionnaires equipped with personal interviews to gather relevant data before they are able to engage into structuring the plan. More often than not, the information may include some personal philosophy, family background and your objectives. But with sensible knowledge that these are private information, everything is made confidential.

Upon the completion of the interview and in-depth understanding of the client, planners will prepare the estate plan draft by outlining the asset disposition and financial situation.

After going through several editing and approval, the plan will involve the other people such as the attorney, investment advisors, and insurance advisors before your plan will be deemed legally certified.

 

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How a California estate planning attorney can help you ensure the best future for your family?

Article by Busywills

Every resident of the Golden State, which is California, should do estate planning. As some basic strategies, you should execute a last will and testament; establish a healthcare proxy and should designate the power of attorney rights. If your estate has high value, establish a trust which will protect inheritance assets. And all these planning strategies must comply with state and federal laws. California has some of the most complex probate laws in the country, so it will be best to work with a qualified California estate planning attorney.

A qualified California estate planning attorney can help you settle estates that are not protected by a trust. These processes vary, depending on if the decedents were engaged in estate planning procedures, prior to death. When individuals die without leaving a will, the estate settlement process requires additional time. This exposes the estate to a high level of creditor claims and the potential heirs to contest the will.

The last will and testament provides directive about how the estate assets should be distributed. It is also used to appoint a personal representative who is charged with duties required to complete estate settlement process. Without these written directives, the estate is settled according to California probate code. In California, estates appraised with values of less than 0,000 are usually exempt from probate if a legal will has been executed and filed through court.

The estate undergoes a compulsory 40-day waiting period to avoid probate. Afterward, the personal representative must present a legal affidavit to the court before distributing inheritance gifts to designated beneficiaries. When decedents do not leave a will, the estate is required to undergo a probate proceeding to determine rightful heirs. Contesting a Will can freeze assets in probate for months on end. This act can force personal representatives to sell inheritance assets to cover legal expenses. Defense fees can easily bankrupt small estates and leave nothing for designated beneficiaries.

In addition to protecting assets, California estate planning attorney can offer the most effective strategy for establishing healthcare proxies. This document allows a person to document the type of medical treatment they do or do not want to have if they are incapable of making decisions due to illness or injury. Healthcare proxies include ‘Do Not Resuscitate’ (DNR) orders, as well as providing directives regarding life support and delivery of nutritional intravenous feedings.

Estate planning is also used to grant the Power of Attorney rights. POA is an important decision that should not be taken lightly. The person granted with POA powers should be someone who can be trusted to make smart financial decisions or difficult decisions on your behalf if you become incapacitated. California estate planning attorney can plan strategies which will be one of the best gifts to behind. Without written directives, decisions surrounding your estate will be left to the courts and chances are they won’t be what you would have wanted. Also putting everything in order will reduce family discord and allow for efficient distribution of the inheritance.

Your Retirement Planning Tool — A 10 Point Checklist

Article by Patrick Millerd

Retirement planning is a complex and challenging task requiring a retirement planning tool that matches the task. However these must not be so complex or “blackbox” that they are not fully understood.

Many, many people are totally unprepared and should realise that they will need some support and advice.

This retirement planning tool is a simple checklist. It makes you think about all the things you need to consider as you start down your path to a, hopefully, rewarding and successful retirement. Initially most people will not find this easy. Be warned there will be many temptations and hazards along the way.

As you start out remember that it’s not the plan that’s so important … it’s the planning. The thinking and understanding. Also as you develop your plan, write it down. In future you can review it, measure it and revise it.

1. Take full responsibility for your retirement plan … it is yours and yours only. Take personal and sole ownership. No-one else should do it for you as, anyway, you are going to have to eventually live it.

2. Think about what “retirement” really means to you. Be as clear as you can. Remember that you could be retired for 20 to 30 years, or even longer. Think back 20 or 30 years and recall all the changes that have taken place in your life. Retirement is not a one stage, short term event and there are many risks to be faced.

3.Although we are swamped by financial planning calculators and retirement planning software “plug and play” doesn’t work too well with something as complicated as retirement. Also hidden in their simplicity is many pitfalls with forecasts and assumptions.

4. Retire with a purpose. Carry on working either to earn money, to enjoy the social contact or to make a contribution. If you don’t need the money think about ways you can use your skills and talents to improve the society around you.

5. Do you feel that you must leave some legacy to your heirs? Are you prepared to degrade your lifestyle to make this happen?

6. What is your your planned retirement lifestyle? Will you have the means to do all those things you’ve always dreamed about?

7. Accept that the world is changing and will never be the same as it was in the past. Embrace the change, be flexible and adapt as things change around you. Wishful thinking should not be the basis for your retirement planning. “It is not the strongest of the species that survive, not the most intelligent, but the one most responsive to change” — Charles Darwin.

8. Retirement should be a new beginning and not the beginning of the end. Dump any baggage, open your eyes, resolve to take on the challenge with enthusiasm and excitement and not let any opportunities pass you by.

9. Health will deteriorate and costs of health care will increase. Consider that it may happen to me rather than it will never happen to me.

10. Once you have thought about the above issues you can then start working through your retirement financial planning. Be careful of advice by people who may have their own interests at heart … and you are merely a fee source for their own retirement plan! Try and recognise the difference between “expert advice” and what Nassim Taleb calls “experts… who are not experts.” Tax law and financial structuring is in the first category and all “future estimates (guesses)” in the second.

Be assured that this retirement planning tool will help you develop a complete plan. It will help you to balance your desires and aspirations with your resources. It will then up to you to make it happen and live your own successful retirement.

Finding Estate Planning Tax Help

Article by David Walcott

We sometimes don’t realize how important it is to prepare for one’s passing away. It is quite an unpleasant thought but unfortunately, it is also everyone’s reality. It is something we should deliberate about and start drawing up our future plans. This is especially true if you own some property or have money that you want to bequeath to your loved ones. You can avoid sharing most of your life’s hard work with Uncle Sam with some proper estate planning tax methods.

While it may be trite to observe that no two individuals are the same, it is not a clich to say that everyone of us can benefit from estate planning tax advice, if only to learn that we will not have to worry because our estates will not be large enough that a tax is applicable. The estates of those just beginning their careers may not require a lot of estate planning tax avoidance measures, while the estates of their grandparents very well might.

You don’t have to go out and pay for an attorney right now just to have your concerns answered. There are some free brochures that you can look up or search for websites offering guidelines and advice on this matter. They can inform you in which category you fall in and if your estate will be taxable. You can then decide if you need estate planning.

A good estate planning guide will suggest several measures you can take to prevent losing most of your possessions to taxation. One of them is placing your properties into a living trust which will allow you to still manage them. Other trusts include provisions for your spouse and/or heirs. All these strategies have similar objectives, getting estate-tax exemption and protecting your beneficiaries from going through a drawn-out probate. Conferring this with an estate planning tax specialist will give you more information on how to go about it.

Getting estate planning tax advice on a continuing basis is important, because you may have to adjust your estate planning strategies as your financial situation and/or the estate tax laws change. Consulting with an estate planning tax expert as your circumstances change will ensure that your heirs are not left with any unpleasant surprises and that your final wishes will be honored as you desired.

If you do follow the advice of an estate planning tax professional, make sure that you keep copies of all the estate planning documents. They will be essential in case you have the bad luck to deal with an unqualified party, and your heirs need to prove a claim of negligence. For more information on tax and estate planning visit http://www.estatecontractstrusts.com

Although situations like this are uncommon, you will still need to rely on the expertise of your attorney or financial consultant. Be circumspect about suggestions made by them because estate planning is not monitored by any government bureau, and your heirs will have difficulty in pursuing a legitimate claim.

Finally, conducting a thorough research on the suggested measures from an estate tax planning guide is where you should start. By knowing exactly what your options are and what they entail, you will be able to judge for yourself if the advices you are getting are accurate and honestly given.

Which retirement plan suits you?

Article by Ishan Goradiya

All retirement plans are not the same. In fact, there is such a wide variety of retirement plans that it is worth it to read up on your choices. Here’s a brief look at the different plans and what they have to offer.

The Traditional 401(k). Most people have such a retirement savings plan, and it works like this. The plan is funded with pre-tax dollars taken out of your paycheck (through payroll deductions). If you’re lucky, your company will match your level of contribution or even make contributions on your behalf – after all, the employer contributions are tax-deductible.

The I.R.S. will currently let you put up to ,500 a year in a Traditional 401(k); COLA adjustments may drive that limit higher in the future. The I.R.S. also allows catch-up contributions (additional contributions from those aged 50+), with a current annual limit of ,500. In 2010, the total amount put into a 401(k) by you and your employer can’t exceed ,000.1

There are several variations on the traditional 401(k) theme …

The Safe Harbor 401(k). A byproduct of the Small Business Job Protection Act of 1996, the Safe Harbor plan combines the best features of the traditional 401(k) and a SIMPLE IRA, making it very attractive to a business owner. With a Safe Harbor plan, an owner-operator can avoid the big administrative expenses of a traditional 401(k) and enjoy higher contribution limits. The Safe Harbor plan allows for employers to make matching or non-elective contributions. Typically, employers match contributions dollar-for-dollar up to 3% of an employee’s income.2

The SIMPLE 401(k). Designed for small business owners who don’t want to deal with retirement plan administration or non-discrimination tests, the SIMPLE 401(k) is available for businesses with less than 100 employees. Like a Safe Harbor plan, the business owner must make fully vested contributions (up to 3% of an employee’s income). But the maximum pretax employee contribution to a SIMPLE 401(k) is ,500, and employees with a SIMPLE 401(k) can’t have another retirement plan with that company.2

The Solo 401(k). Combine a profit-sharing plan with a regular 401(k), and you have the Solo 401(k) plan, a retirement savings vehicle designed for sole proprietors with no employees other than their spouses. These plans currently permit you to contribute up to ,000 annually plus ,500 in catch-up contributions for a total of ,500 if you are 50 or older.3

The Roth 401(k). Imagine a Traditional 401(k) fused with a Roth IRA. Here’s the big difference: you contribute after-tax income to a Roth 401(k), and when you reach age 59½, your withdrawals will be tax-free (provided you’ve had your plan for more than five years). The annual contribution limits are the same as those for a Traditional 401(k) plan.4

You can roll Roth 401(k) assets into a Roth IRA when you retire – and you don’t have to make mandatory withdrawals from a Roth IRA when you turn 70½. With a standard 401(k), you have to roll over the assets to a traditional IRA and make the required withdrawals.4 The DB(k). The DB(k) is a defined benefit retirement plan with some of the features of a 401(k). Companies with fewer than 500 employees are starting to put them into place. They offer plan participants a retirement savings plan with the potential for a small income stream in the future, mimicking the pensions of years past. The pension income equals either a) 1% of final average pay times the number of years of service, or b) 20% of that worker’s average salary during his or her five consecutive highest-earning years.5,6And then there are SEP-IRA, SIMPLE IRA and Keogh plans …The SEP-IRA. This employer-funded plan gives businesses a simplified vehicle to make contributions toward workers’ retirements (and optionally, their own). The employer contributions are 100% vested from the start, and the employer can supplement the SEP-IRA with another retirement plan. In 2010, these plans have a ,000 maximum contribution limit, and an individual’s personal contribution limit depends on such factors as service, performance, and salary. These plans don’t permit catch-up contributions.3,7The SIMPLE IRA. This is like a SIMPLE 401(k) – a small business retirement plan with mandatory employer and optional employee contributions and a current ,500 annual contribution cap. But in this plan, there is one big difference for the business owner. If the business is not doing well, the owner can reduce plan contributions. The employer contributions are still 100% vested from the beginning, and ,500 catch-up contributions are currently allowed for employees 50 and older.3,8The Keogh Plan. The Keogh is designed for small unincorporated businesses. There are defined benefit, money purchase and profit-sharing variations; the defined benefit variation is a qualified pension plan offering a fixed benefit amount. In 2010, the annual contribution limit for a profit-sharing Keogh is ,000.9Did you know you had so many choices? If you are an employer, you may not have realized you have such an array of choices in retirement plans. But you do, and asking the right questions may represent the first step toward implementing the right plan for your future or your company. Be sure to ask a qualified financial advisor or business retirement plan consultant about your options today.

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College Savings Plan as an Estate Planning

Article by Art Franks

The 529 College Savings Plan as an Estate Planning Move

Let’s take a brief look at the 529-college savings plan as an estate-planning move. A 529 plan is not merely just a great vehicle to fund your child or grandchild’s future. A 529 plan is an excellent tool to remove money from your taxable estate. This will assist you in lowering your tax liability and keeping intact more of your estate for your loved ones once you pass.

All 50 states and the District of Columbia now offer some type of 529 savings plans. A 529 plan is a state sponsored savings plan that invests money on behalf of beneficiaries. The earnings are tax deferred from federal income tax and most states have programs that will defer state taxes. If your beneficiary uses the money from this fund for any qualified education purpose, the withdrawals will be free of tax.

There is a lot of competition between states that has lead to very large contribution limits. This is good news for you as you plan your estate. 529′s have extremely simple investment options- age based and individual portfolios. Basically, these college savings plans afford the family the ability to transfer wealth from generation to generation, free of income, estate and gift taxation.

So what makes a 529 college savings plan so attractive to an estate planner? They do not have any income limits unlike the educational IRAs. Almost everyone can qualify for a 529. And if you’re looking for a way to reduce your estate tax bill, this is a great solution. Take advantage of ,000 in annual tax-free gift contributions. If you’re married that means you can contribute up to ,000 for each beneficiary in one year. This is free from federal gift tax penalties. It is advisable to look into your state laws on gift planning for 529′s as they vary.

If you need to reduce the size of your estate you could contribute up to ,000 (five years worth of gifts) in year one of a five-year period. Or if you’re married you can contribute up to 0,000. This is a good resource to transfer wealth by reducing the size of your estate and do away with estate taxes.

The account owner is always in charge of the plan’s assets. Even though the monies added are considered gifts, the owner does keep control. The donors can even take back the money for themselves or transfer the account to another beneficiary. If the owner of a 529 account were to die, the value of the account would not be counted in the estate. The account value would be in the beneficiary’s estate. The exception to this would be if you had made the 5-year election and passed before the 5 years was over. Then, the part of the contribution that was assigned to the years after your death would be included in your federal gross estate.

It is also very easy to move the money in an account through 529 rollovers or by changing your beneficiary. If you have a need to distribute your estate, you can set up 529 plans for a large array of family members. This includes children, siblings, grandchildren, uncles, aunts, stepfamily, cousins and so forth.

If you need to transfer wealth, look into 529 plans as part of your estate planning strategy. At the very least, the 529 college savings plan, as an estate-planning move is something to discuss in more depth with your tax professional. This is an extremely generous gift for your beneficiary. Imagine the reward of knowing you’ve provided someone with the gift of an education.

Little Rock AR Estate Planning Attorney Wayne Ball on Estate Planning… www.ball-stuart.com There are many legal strategies involved in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to Arkansas’s laws of intestacy. Of course, this may not be the plan they would have chosen. A properly drafted estate plan will replace the terms of the State’s estate plan with your own. For more information on Estate Planning please visit this page… www.ball-stuart.com To schedule a consultation from our website then please visit this page… www.ball-stuart.com
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Important Estate Planning Documents in Oklahoma

Article by Patrick R. Carlson

The guide is intended as a general overview of Oklahoma estate planning documents. Every situation is unique, and many rules have exceptions. This article is not a substitute for discussing your situation and needs with a qualified attorney.

Why do I need estate planning documents?

Estate planning is a process where you organize your property and affairs to minimize costs and taxes when you die or become incapacitated. Estate planning documents are important because they allow you to take control of the process and decide how everything should work together. These estate planning documents control the process and identify who controls your property, how it is to be managed, and how it is to be distributed.

If you don’t have documents like a will or trust in place, then the State of Oklahoma (or the state you live in) essentially writes a plan for you. The results are not tailored to your situation. The default rules do not work well if you have minor children, have step-children, or are in a non-traditional family (such as a second or later spouse or same sex couple). The default rules do not provide much asset protection for beneficiaries. A probate, which is a potentially lengthy and costly court process, is often required when a person dies with no plan in place.

If you don’t have documents like a power of attorney or advance directive for health care, then a court proceeding may be necessary to give someone else the authority to make decisions on your behalf. These court visits can be distracting and are avoidable with appropriate planning.

Important Documents

Many Oklahomans need a will, a revocable trust, an advance directive for health care, and a durable power of attorney. These documents are the foundation of a comprehensive estate plan. These documents, taken together, organize your property and distribute it the way you want when you die and allow someone you trust to make decisions when you can’t.

Wills

Wills are the most familiar estate planning document to many people. In Oklahoma, a will is a legal document that names a Personal Representative. This Personal Representativce is a person who handles many of your affairs after you die. It also contains provisions that distribute your probate estate to your beneficiaries. The biggest downside of a will is that it must go through probate, a potentially expensive and time consuming court process.

Trusts

A revocable trust is a legal document that allows your beneficiaries to completely or nearly completely avoid Oklahoma probate court when you die. The trust becomes the legal owner of your property and you are a beneficiary of the trust. During your life, you may add or withdraw property as you please. You may also change the ultimate distribution of the property fairly easily by making amendments to the trust while you are alive. A downside of trusts is the paperwork that must be filed to make the trust effective. It’s important to get assistance in transferring title to your property into the trust’s name. Without proper funding, a trust is largely ineffective as a planning tool.

Other Tools (not document based)

Other tools such as payable on death accounts, transfer on death deeds, joint tenancy, and beneficiary designations can be used to complement your will or trust. The important thing to remember is that everything used should be designed to work together. The overall plan and design of your estate planning documents, which incorporates a will, trust, and these other tools, should represent your values and wishes. Like wills and trusts, many of these other tools have various rules and exceptions. Advice regarding beneficiary designations and the use of these other tools is widespread. Many other professionals, such as accountants, realtors, bankers, and others may try to advise you regarding the use of these tools. However, it is best to consult with a qualified estate planner when making decisions regarding the use of these other tools.

Advance Directive for Health Care and Durable Power of Attorney

With people living longer and the unfortunate prevalence of long-term debilitating illnesses, such as HIV, cancer, dementia, and Alzheimer’s, planning for a time when you may no longer feel comfortable managing your affairs without assistance is more important than ever. Several tools exist to assist with this need, and are recommended as a part of any comprehensive estate plan.

An advance directive for health care is a legal document that specifies the type life-sustaining care that should be provided as well as designates someone to make critical medical choices on your behalf if you are unable to do so.

Another very important document, a durable power of attorney, is a legal document that grants another person the ability and authority to manage your finances on your behalf. If you become incapacitated, the person who has been named in your power of attorney can manage your financial affairs on your behalf. Although no one wants to be incapacitated, a durable power of attorney is vastly more favorable arrangement than a guardianship, which is a costly, cumbersome, court-supervised management of your finances.

Estate planning documents are more than just wills or trusts. A will, a trust, a power of attorney, and an advance directive for health care are the documentary foundation of any Oklahoma estate plan. An Oklahoma estate planning attorney can help guide you through the process. Having a comprehensive, well-designed plan in place protects you and your family.

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Retirement Planning – How and When to Start

Article by Punit

Retirement is a phase that comes in everyone’s life. A man cannot work for his entire life. During the working phase of his life, he needs to start saving for his life after retirement. His standard of living might be high during the working phase of his life. But after retirement, he might not be able to maintain it because of improper planning. Most people do not know when and to start retirement planning.

The first important thing to consider before retirement planning is to have a clear idea about what you want to do after retiring. Based on that, you can determine the amount of money you require so that you can choose a suitable method to acquire it. The basics of retirement are savings. If you are good at saving money then your job is almost done. According to statistics, 70 percent of the yearly pre-retirement income must be available to have sufficient money after retirement. This is essential to maintain the same standard of living that you have experienced in your working years.

So when exactly do you start investing in retirement plans. It is simple yet it is unclear for so many people. The answer is as early as possible. That is, as soon as you start earning, you must save some percentage of it for the future. Those who have the habit of saving money have no problem. But it might be a challenge to those who do not know how to save money.

Most employers are aware that a high percentage of their employees are not in the habit of saving money. Hence, they may take a part of their income and invest it in retirement pension plans. This amount will be given to them when they retire. This is found in most of the private organizations. However, this type of retirement plans is not so efficient because if the money is given in whole, then it will not be useful for the employee. They might spend it out and will have to depend on some other source for their needs.

There is also the government retirement pension plans. Government employees and bank employees will be having this facility by default. Under plan, a part of the employee’s income is taken. After retirement, a part of this money is paid back to him on a monthly basis. This is called pension. Every month they receive a fixed amount from the government. Even if the person dies, his beneficiary will receive this amount. This is advantageous compared to the provident fund given by private employers because there will be a fixed source of income after retirement.

If you are working in an organization which does not take any measures for retirement, then you can try to start working for one the good private companies which offer different plans including pension plans. Your retirement is one of the most important phases of your life. If you do not start planning for it now, you might regret it later.

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