Retirement Planning and Investment Advice

Retirement planning involves setting financial goals and taking steps to achieve them.

Read a guide on retirement planning and investment advice below. Nothing in life is certain but death, taxes...and retirement? Retirement is almost as certain an occurrence as most other certainties in life. Effective retirement planning often includes investment advice from professional l financial advisors. Essentially, retirement planning is the assessment of financial goals and the processes and plans necessary to achieve them. Successful retirement planning often begins at a much earlier age than some people realize, however. Read ahead for important information about retirement planning and the investment advice you need to live your best life during your golden years.

What Is Retirement Planning?

The concept of retirement planning seems simple enough to comprehend on the surface. A plan involves a course of action taken to accomplish a desired result. Retirement involves the cessation of your time in the workforce with no intentions of restarting full-time employment in the future. At a certain age people become eligible to receive retirement income benefits from the U.S. federal government. The legal age to obtain Social Security retirement benefits (SSA) benefits in the U.S. varies slightly based on the year a person was born. The normal retirement age, also referred to as the full retirement age (FRA), is the age at which a retiree is eligible to receive the full number of benefits allowed. While these benefits are helpful, they are often not enough for a person to live comfortably. In some cases, SSA benefits are not enough to survive (financially) at all. 

Retirement planning is the process of assessing financial weaknesses, strengths and goals then making a plan to achieve those goals. For most people to maximize results their planning process needs to begin early in life. In fact, it often needs to begin much earlier than some people realize. Retirement planning starts in the twenties for some people. Yes, many jobs have pension plans, which also help prepare for financial needs during retirement. A truly effective retirement plan is diversified, flexible and often comes to fruition based at least partially on the advice of a professional financial advisor.    

Financial Advisers and How They Help You Plan for Retirement

A professional financial adviser helps manage your income, debt, investments, and savings to get you the best possible results. The process of planning for retirement is a marathon and not a sprint. Waiting until later in life to plan for retirement is a mistake many people regret. A financial advisor helps prevent this mistake by guiding you down a path more likely to attain your goals. 

Financial advisors help you manage debt. Debt management is not only about paying off high amounts of bills, either. Debt management involves planning for debts such as college tuition, new vehicle purchase, medical emergencies and the possibility of long-term care housing expenses. Financial advisors teach strategies for investing, which include portfolio diversification and reinvesting profits to create even more retirement income. Downsizing your assets into more affordable options is another strategy taught by financial advisors to help increase your retirement funds. 

Reasons Why Retirement Planning Is Important

The important of retirement planning extends far beyond the obvious need for money. Of course, the need for money during your retirement years is still a priority. If you do not plan for your retirement, you might find yourself suffering from financial hardship during the time of life when you need the most peace of mind and comfort of all. Financial stress is proven to be one of the most damaging types of stress people experience. Financial-based stress destroys marriages and causes mental and emotional health breakdowns. Stress due to money problems is also proven to cause varying degrees of heart disease, sleep deprivation, migraines, depression and even diabetes. Therefore, retirement planning helps ensure better overall health in your later years. 

Retirement planning is important because it allows you to pay fewer taxes. It also helps you make more logical and beneficial career and lifestyle choices. Is it wise to quit your job and start your own company now? Should you purchase a vacation home and rent it out now or will your money better serve you in another way? Retirement planning also prevents your children from having to pay for your long-term care and funeral expenses. It allows you to be philanthropic if you choose to donate money to charities without causing financial burdens to yourself or your household. Overall, retirement planning is important because it helps you live your best possible life during the years where you are meant to do exactly that. 

Plan for the Retirement You Want

One of the most significant benefits provided by effective retirement planning is the ability it creates for you to plan for the type of retirement you want. Do you want to spend your retirement years traveling? Do you have a large family and instead want to live out your retirement years spending as much time around your grandchildren and great-grandchildren as possible?

The sooner you begin planning for your retirement the more likely you are to achieve your financial goals and live the retiree lifestyle you desire. This includes purchasing and maintaining a large boat or yacht and sailing around different parts of the world. Maybe you want to raise horses, learn to paint, or play a musical instrument. Whatever your retirement goals are, the sooner you begin planning for them the more likely you are to get the results you seek.

Traditional Pensions

A pension plan is a financial benefit program, which involves your employer contributing money into a fund you receive when you retire. Traditional pension plans are no longer as prevalent in the U.S. as they once were. Traditional pension plans have been largely supplanted by 401(k) retirement savings plans, which cost less money for employers to facilitate. The U.S. Bureau of Labor Statistics (BLS) states approximately fifteen percent of private employees and eighty-three percent of public employees are enrolled in an employer-based defined-benefit plan.

Key Retirement Plan Benefits to Consider

Key elements to consider pursuant to your retirement plan benefits include an assessment of your potential expenses vs. what your government-sponsored and pension benefits will be. You need to invest or find additions sources of retirement income if your assessments find you coming up short of your projected needs. Understand your timeline and make investment decisions based on when you will need access to your money. Also be certain to assess your risk tolerance compared to your investment goals. Avoid risks that might cost you too much or cause more stress than they are worth to you in the end. Analyze tax laws and invest accordingly to legally avoid paying as many taxes as possible. Finally, keep estate planning at the forefront of your retirement plan to prevent your loved ones from experiencing financial hardships when you die.