Entries Tagged 'retirement planning' ↓

Planning ahead is not planning in vain. People will add years into their lives until they have reached a moment when they want to retire. But with inflation, longer life expectancy and doubts on the Social Security’s future, how will you know how much retirement fund you will need?

Every person needs to retire and sometimes are forced to retire due to unforeseen circumstances. The years of retirement need not be a life of boredom and dullness but one that is happy and prosperous. Picturing yourself in the latter situation depends on the steps that you are taking today. Since there are so many changing variables in the offices, investing now with the future in mind seems like a viable idea. In addition to that, steering the wheel of your finances in the future can lead to a more comfortable retirement.

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Binary Dollar posted an open mic discussion about How Much Money Does One Need to Retire. When I have read the comments just a few hours ago, I’ve noticed that many responded that they need millions of dollars to retire comfortably. Now although I haven’t really given much thought about it in the past, it only took me a few minutes to compute and decide to leave a response that I only need $200k to spend for the last few decades of my life.

Why? Simply because I live in the Philippines. Although the US dollar has depreciated considerably this year - it’s down to Php46 per dollar compared to Php55 per dollar last year I think, a dollar grows 46 times here! So if I have $200,000 when I reach the age of 30, my dream retirement age, I’ll have 9.2 million pesos, which when divided into two (inflation issues) is still approximately 4 million pesos. Four million pesos will allow me to have about 11,000 pesos ($239) for monthly expenses, which I think is more than enough if I get to retire with good health. Why only Php11,000 monthly budget? I never intend to retire with any debts and I believe in living cheaply.

How about my beneficiaries? Of course, I don’t want to, God forbid, die without leaving anything for my beneficiaries. So I also included in my comment that I need another $200,000 for my family and other people who I think deserve some inheritance. And while that money’s earning interest from any investment service I decide to keep it in, I’ll keep on reinvesting portions of its interest somewhere else to keep the ball rolling and maybe for me to afford some bits of luxury with my loved ones every now and then.

So yeah, technically, I’m planning to go for $400,000 for my retirement fund.

Anyone who thinks I’m crazy to have these financial goals? I’d love to hear from you.

Tags: retirement, dollar depreciation, living cheaply

It is wise to set aside what you’ll need for retirement. One can never be too young to think about retirement.

What would you do before retiring? What are the dos and the don’ts when saving up for that long holiday?

Shannon Zimmerman shares some hot retirement tips: Continue reading →

But before we answer that all-important question, let’s make sure that you all understand what retirement annuities are. In a nutshell, annuities are investments that can be purchased with a single payment or in installment basis, and payouts can be either immediate or deferred, and with a fixed or variable rate or one that’s indexed. Annuities can also be for one or two persons.

How much your contribution is annually and how old you were when you purchased an annuity are just some of the factors that affect the expected rate of return from annuities.

Retirement annuities are simply annuities that are purchased for the sole purpose of having a comfortable supplementary source of income in your retirement years – supplementary being the operative word and which finally gives us the chance to answer our primary question.

If you have extra money, and you wish to earn from it in a no-nonsense straightforward manner, retirement annuities are for you. Furthermore, contributions made for retirement annuities are tax-deductible which allows you to save even more money for the future.

If you’ve already a retirement plan arranged and able to cover for your necessities and you’ll just need another source of income to fund for trivialities and recreational pursuits, a retirement annuity is again the answer to your problem.

BUT retirement annuities should only be considered as a supplementary source of income. Because of how it’s designed, people shouldn’t expect retirement annuities to be able to fully and easily cover for living and emergency expenses.

Basically speaking, retirement annuities can make your golden years fun, but they can’t guarantee to keep your golden years golden all throughout. You’d need a different investment for that.

[image from Flickr uploaded by km98_1]

The best retirement year is different from one person to another due to various factors like age, type of occupation, what kind of retirement living you’re envisioning for yourself, and how much you’re earning, spending, saving, and investing.

You will have to think carefully about those factors in order to determine where you stand now and when you can expect to retire comfortably. If doing the computations is giving you a headache, meeting with a financial consultant can generally give you the figure you need.

Planning ahead is necessary, even if the process may be painful for many. According to the 2006 Retirement Confidence Survey, 31% of Americans would rather scrub a bathroom than plan for retirement. And if you only rely on your salary and savings, there’s a good chance that your golden years would be a bit tarnished because of persisting financial problems.

Of all the factors affecting when it’s the best year for you to retire, determining how to invest your money NOW is probably the most important of all. Look for options that will make your money automatically allocated in the appropriate investments for the appropriate amount at the expected year of retirement. Getting a good 401k plan from your employer is also another alternative.

If, however, you wish to personally manage your investments, make sure that your portfolio is diversified. Your money should be divided between investments and savings.

Lastly, do adopt a frugal – not cheap – attitude towards your money. Save now and spend later…when you’re retired.

And when that year finally arrives, here’s one last tip: fiscally speaking, it will be more advantageous for you to retire on July 1.

[image from Flick uploaded by sweetangel05]

When planning for retirement, people usually go with the trend and choose to invest their money in retirement annuities without much thought. And retirement annuities are certainly favorable because they allow you to enjoy several tax deductions. But there’s one thing that most people fail to consider when investing in a retirement annuity: if something happens to them prior to the end of the contract, the loved ones they’ve left behind will inherit NOTHING.

And so, insurance companies have created modified endowment contracts as an alternative for people with enough foresight to plan carefully for future retirement.

There are a number of advantages that you can enjoy with a modified endowment contract or MEC. Like retirement annuities, they come with considerable tax benefits and allow you to make withdrawals in cases of emergencies. They also allow you to choose between fixed and variable rate options.

Unlike retirement annuities and other retirement plans, modified endowment contracts will not have to be subjected to probate.

As long as no one contests anything, the earnings from your MEC will go directly to your heirs or beneficiaries. Also, modified endowment contracts can be purchased by certain kinds of trusts without eliminating their tax benefits. Lastly, the cash value from MECs build up more quickly than most.

However glorious modified endowment contracts sound, they are still not for everyone. They are first and foremost designed to provide income after retirement, so withdrawals that are caused by emergencies will be slapped with hefty fines.

In the end, the rightness of choosing a modified endowment contract depends greatly on whether or not you have money you can afford to set aside until your retirement and if you have heirs to consider.

[image from Neighborhood Scout]

You’re too young and you think you don’t have to read about anything regarding retirement just yet? You have to think twice! One can never be too young to be planning for his or her retirement.

So, how do you make financial planning for your retirement a lot less stressing? Why not start with the assessment of your present financial situation?

One way to check on your current financial standing is through taking note of your payslip figures, assets, and other financial documents.

Next, start crunching those numbers with the help of a wide array of calculators that will show you whether how much it will take for you to get a brighter retirement future. Many retirement calculators, which can be found online work on the figures hundreds of times to show different assumptions on inflation, returns and other aspects of finances that can affect retirement planning. Here is a list of those odds-calculating retirement calculators, which are also known as Monte Carlo simulations:

- T. Rowe Price’s free Retirement Income Calculator at http://www3.troweprice.com/ric/RIC/.

- Advanced FIRECalc at http://firecalc.com/index.php

- a paid retirement calculator is offered by Financial Engines at https://www.financialengines.com ($150 to $300 a year), which might be offered for free through the mutual fund company that provides your 401(k) or similar plan

Which is your favorite retirement planning calculator?

via Philadelphia Inquirer

[image from Direct Properties]