Retirement planning helps you define and visualize your short-term, medium-term, and long-term retirement goals and will help you create a workable strategy to reach those goals. This strategic approach will give you a holistic view of your current financial situation and will present actionable steps to get you from where you are today to where you want to be in the future. By bringing your goals into focus, you will increase the likelihood of reaching those goals. A financial plan will also help you prioritize the goals most important to you and your family. No matter who you are or where you are in life, retirement planning can be a valuable tool in helping you reach your retirement goals.
An important starting point is first assessing your goals, determining your desired retirement age, where you want to retire, and the lifestyle you wish to maintain during retirement. This exercise requires an accurate evaluation of how much you need to retire in actual dollar figures, not just guesstimates, since reaching your goals and realizing your dreams requires realistic planning and, of course, money and income.
Understanding your risk tolerance is fundamental to carving out your retirement investment plan. Think of it as corresponding to your sleep quotient. Will it keep you up at night or will it enable you to sleep soundly? If you set your risk too high and are constantly worried, it is probably not the right level of risk for you.
After you have gone through the preliminary evaluation, necessary analysis and are comfortable with your retirement income plan designed for you, stay committed. Be disciplined in carrying out all the steps spelled out to keep your retirement funds growing. More than likely, this could involve setting aside a fixed amount of money on a regular basis and putting into your designated funds. For example, you may invest in XYZ Company each month on a dollar-cost averaging basis. Which means if the share price goes down you will buy more shares and if the price goes up, you’ll buy fewer shares, but over the long haul your share prices average out. This practice doesn’t insure profit or protect you from loss but it does free you up for the stress of trying to buy at “the right time” or time the market.