Financial Planning and Retirement

If you are young you probably aren’t thinking much about how you’ll finance your retirement and if you’re older you probably wonder if you’ve planned properly for your life after you quit working. 

By now we all know that we won’t be able to count on any government retirement program to pay our expenses—in fact, at the rate the economy is going it probably won’t even pay the light bill.  It’s very important to be sure that you will have enough to maintain a decent lifestyle after retirement and the only way you can do that is to take charge of your own money.

A plan such as an IRA or a 401K is a good idea but if you want to enjoy your retirement you should take a few more steps.  The first thing most people do when they are planning anything is research. 

They look up resorts and activities when planning vacations or sales when they are going to buy a particular item.  With retirement planning you’ll need to research how to manage money, where to invest it and how to grow your wealth instead of just maintaining it. 

Taking control of your own money rather than turning it over to a financial planner is usually safer and more profitable.  The average retirement account that is managed by a financial consultant only maintains itself, rarely exceeding 4-6% growth. 

That profit is just enough to keep up with future taxes and inflation.  That retirement funding will leave you with just enough to exist on for a few years.  People who reach the age of 65 have a 60% chance of living till the age of 95.  That’s 30 years that you’ll need to finance!

When planning for retirement the first thing you need to consider is how much money you will need.  Take stock of the assets you have now including real estate, current retirement plans you’re enrolled in and any pensions or entitlements you’ll be receiving on retirement.

Once you have that list, take stock of what you expect from those “golden” years.  Do you plan on traveling or finally indulging your favorite hobby?  Next you should list any expenses you expect to have, such as medicine for medical conditions both current and expected in the future. 

Now you will have an outline of how much you will need when you retire.  If it doesn’t balance you need to begin an aggressive wealth accumulation campaign.  Since the average financial consultant has little interest in how much money your investments make it’s up to you to manage your own money and make it grow to finance your retirement.

You can start managing your money by learning about investment opportunities that can grow your wealth each year. Get to know how the stock market works and investigate bonds, mutual funds and commodities trading.  Take a course in stock trading; learn the terms and how to set up your own brokerage account.  Once you know all the ways that you can make your money grow you can make educated decisions about the course you want to take. 

You may wonder why you shouldn’t just let a broker make your trades since brokers work on commission and should have good incentives to grow your money.  The truth is they do make commissions but only on the trades, not on the profit you realize.  The more trades they make, the more profit they realize regardless whether it benefits their clients.  This is why you should be in charge of your own money.

Managing your own money is the first step to financial independence and a comfortable, exciting retirement.