How Does Retirement Planning Help with Planning Your Second Childhood?
Retirement is also known as a “second childhood”, because like your first childhood, you’re dependent on others for your basic needs. The difference lies in the fact that you have a choice, and can save the money you’ll need for the golden years while you’re still young, healthy and have a regular source of income.
Proper retirement planning can help you:
- Meet your personal and financial goals
- Maintain the lifestyle you are comfortable with
- Do everything you enjoy, even after you have retired
- Receive care in the comfort and safety of your home
… and much more!
Financial Planning for a Worry-Free Retirement
As you grow older, the fear of spending your retirement in an endless cycle of poverty, dependence on children, or struggling to pay off accumulated debt instead of enjoying the twilight years can take the joy out of your life. An early start to retirement savings is the only way to set these worries to rest.
Let’s look at an example to understand this:
Linda and John are a young couple who got married in their late 20s, when they start setting aside a relatively small percentage of their incomes into a joint retirement savings account. Over the next 20 years, they make a few investments to pad that primary fund, and by the time they retire, they have a sizeable nest egg to live on.
Stacy is Linda’s college roommate, and she would rather spend her money on the newest smartphone and designer clothing, believing that “savings are for later”. As she enters her 40s and starts to worry about retired life, advisors tell her that she’ll have to save at least half of her current income every month, in order to meet her retirement goals.
What’s the difference between the two?
Linda and John started saving early, so they were able to build a larger fund with lower monthly sums, which didn’t disrupt their budget very much. It’s simple math, really!
How Should You Plan Your Retirement Income?
Effective retirement income planning is based on various factors, like:
- Current income levels and expenses
- Projected costs of basic retirement needs
- Savings instruments and investments
- A budget for travel, hobbies and other post-retirement activities (you can’t just be sitting at home all the time!)
- Medical, healthcare and assisted living expenses (for both the short and long term)
- Inflationary trends and their impact on all of the above
Other than standard retirement savings accounts like 401(k)s and IRAs, as well as life insurance, you need to consider investing in LTC (long term care insurance) too. The average life expectancy is higher than ever before, so chances are that you may need managed healthcare at some point, which can be extremely expensive.
Retirement income planning is complex, so you should get expert advice and assistance to help you with the process. To understand the why and how of investing in life insurance, LTC and other vehicles that can help without hitting your pocket too hard, contact the financial experts at LifeCentra today!