While it may be challenging to think about retirement, especially early on in your career, planning for it is essential to help ensure financial wellness and comfort during your golden years.
What Is Retirement Planning?
Retirement financial planning involves determining how much money you will need to live your desired lifestyle when you retire and devising a long-term plan to help you accumulate this sum before your planned retirement date.
Why Is Retirement Planning Important?
Once, you’d work for many years at the same job, and then your employer would fund your retirement through a company pension. Retirement planning is important to help prevent running out of money during retirement.
Your plan can help you calculate your risk level, your necessary return rate on investments, and your portfolio withdrawal strategy.
Retirement Planning Strategies By Life Stage
We’ve mentioned that starting retirement planning is essential, but the process looks different in each phase of your life, from young adulthood to early middle age, late middle age, and retirement.
Young Adulthood (20s To 30s)
While young adults starting their careers may not have much money to devote to retirement savings, they certainly have time working in their favor.
Moreover, young adults can benefit from the power of compounding by saving for retirement at an early age.
For instance, a young adult might choose an asset allocation heavily weighted toward riskier investments. By building the habit of saving when you’re young, you’re setting yourself up for a more secure financial future.
Early Middle Age (40s To 50s)
For many people during this life stage, their income is growing as their careers advance—but so are their financial responsibilities.
For instance, they might have begun a family and taken on financial responsibilities such as a mortgage, life insurance, several auto payments, and all the costs of raising a child and their schooling.
Pre-Retirement (Late 50s To Early 60s)
With retirement approaching, middle-aged individuals will want to monitor their asset allocation closely. There will be less time to make up potential losses in their retirement savings account.
Hence, there’s less short-term exposure to more volatile investments like stocks and more exposure to investments with less volatility.
Retirement (Late 60s And Beyond)
During retirement, your primary goal should be following a withdrawal strategy. Once you’re retired, it’s important to monitor your finances.
Review your retirement plan regularly to ensure your savings will last throughout your golden years. If you’re unsure about doing this, you should certainly consider working with a financial planner specializing in retirement.
Plan Your Golden Years With KMR Financial
By starting early, diversifying your investments, and seeking professional advice, you can work towards achieving your retirement goals.
Are you looking for professional advice to achieve your retirement goals? Consider consulting with KMR Financial. Our experienced team will guide you and provide strategies for your retirement. Contact us now to get started.
