HOW TO PLAN FOR A DECENT PENSION WHEN YOU RETIRE…
Without a doubt, whatever age you are, people believe that when the time comes for them to stop working there will be enough money to enjoy life to the full.
Most people believe this but few actually achieve it without some sort of sacrifice.
As governments worldwide are failing to provide for your pension, you must take care of this part of your life yourself.
An old maxim was always ‘to look after the old person you have to start young’ and this is a very sensible way to view pension planning.
To create a solid retirement plan you should answer these questions:
- What is my current income?
- What are my current financial commitments?
- When will these commitments change?
- How much money will I need when I retire?
- How much money do I want when I retire? — the “real question”
- When do I plan to retire?
- What sort of life do I want when retired?
- Will my current pension arrangements (corporate & private) be sufficient to pay for that life?
- What can I do now to improve the situation?
If the answers to any of the above questions doesn’t make you happy now it is the right time to take some vital action, whether it is by either:
- Consolidation of current pension arrangements
- Building up further pension benefits from income and/or capital
So future pension planning and maximising your existing arrangements are both of paramount importance.
Pension planning has two basic stages:
The accumulation of capital
Small regular contributions during your working career can accumulate into significant capital.Please be careful while choosing the instrument for it. Make sure it will be flexible enough to be able to follow your life circumstances, will have low maintenance fees, no withdrawal fees or fees for missing payments, as high fees can ‘eat’ a lot of the potential growth.
Spending the capital at retirement
When it comes to the retirement you can chose to cash out whole your savings and use them in a way you want or you can keep the capital amount and take the sufficient income on monthly, quarterly or annual basis — let’s admit it, this part is more pleasant.Plan your pension to provide the desired amount of income, based on the standard of living you are currently accustomed to and want to retain!
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