Planning meticulously for retirement has the effect of removing the financial stress from the situation, and the earlier someone starts, the less stress is involved.
Starting to plan for retirement only a small number of years in advance is not to be recommended, given the level of investment involved in providing for yourself in order to maintain a comfortable lifestyle into old age.
If planning for retirement is going to succeed then there needs to be an appropriate investment strategy in place.
Picking A Strategy That Works For You
A critical point to bear in mind is which retirement investment option or options to choose.
Someone like Spiro John Latsis, through his family’s holding in asset manager EFG Bank European Financial Group, offers investors, including those planning for retirement, a number of different investment strategy options, so it is worth the individual investor’s time to sit down and map out where they want to be at the end of their investment cycle.
Choosing The Right Fund
Looked at from the perspective of someone planning for retirement in the US, they will likely have signed up for a 401(k) account through their work or have started saving in an IRA, or individual retirement account.
Many investors will focus their strategies primarily on mutual funds. For those starting out on the road to planning for retirement, I would suggest considering two different types of mutual funds: index funds and what are known as life-cycle funds.
An index fund is run in a way that mirrors a specific segment within the stock or bond markets. An advantage of using index funds is that the fees applicable can be relatively low because the role of the fund manager is quite limited.
A life-cycle fund is focused on helping investors save according to their age bracket. For instance, if I was to advise someone who intends retiring in the year 2054, I might suggest they choose a fund geared toward that particular year.
A key benefit of a life-cycle fund is that the balance of investments – typically made in stocks and bonds – is adjusted to take account of the investor’s age and the number of years remaining until they intend retiring.
What You Need To Consider When It Comes To Retirement
Other considerations in terms of retirement planning include where the retiree lives – a senior community may be a viable option for some – and what ongoing costs, such as medical expenses, will have to be factored in to day-to-day living needs.
Planning for retirement not only has benefits in terms of the money in your pocket but also has health benefits.
There are particular health benefits to be got, I believe, from choosing the right senior community to live in, given the access such communities provide to round-the-clock medical care and the security of living in a community where you know you will be looked after properly in event of an emergency, medical or otherwise.
The First Step
As a first step to retirement planning, I would recommend sitting down, either with your family or a financial planner, and projecting the level of post-retirement income you will require.
This will give you a good idea of how much you will need to save in order to retire in the right way.
So how about you, have you begun saving for your retirement yet?