Retirement is one of the most important life events many of us will ever experience. It can also be one of the most complex too! In terms of the financial planning process.
I have built a calculator so that you can check to make sure that you are on track to reach your retirement goal and make sure that your nest egg is going to be big enough to support you through out your golden years.
Why plan for your own retirment?
Taking retirement planning into your own hands is key to success. There is a lot of uncertainty surrounding social security and pension benefits. To be up front, the prospects of government-sponsored retirement is not very good. As we all know, the developed world's populations are continuing to age rapidly, with fewer and fewer working-age people remaining to contribute to social security systems. You do not build up your own pot of funds for the future, the working population pays for pensions today, which is why the majority of governments are increasing retirment ages and freezing benefits.
So how much do I need and how much do I need to save?
Everyone is different. There really is no definitive number that would guarantee everyone an adequate retirement. It depends on many factors, including your desired standard of living, your expenses (including any medical costs) and your target retirement age.
Now for the good news: It's entirely possible to determine a reasonable number for your own retirement needs. All it involves is answering a few questions. I have created a retirement calculator to help you plan ahead and estimate without doing all the number crunshing yourself if you are on track. It's entirely possible for you to accumulate sufficient capital to last you through your retirement.
Calculate your needs:
How to get the most out of the calculator:
- The further you are from retirement the more volatility you may be able to withstand as your portfolio will have longer left to make up any potential downturn.
- As you get older and closer to drawing on your pension you should generally be in a safer portfolio to reduce the impact a downturn would have on your retirement income.
- Everyone has a different capacity and tolerance for risk. To find out your please contact me
- Remember that you have 7 days to fill with activities and lots of additional time for family, friends and holidays
- Think about how much medical insurance will cost you as it can be very expensive later in life
- You should hopefully if you have planned correctly paid off your mortgage and be debt free
Decide your target retirment age.
Decide the annual income you will need in retirement.
Determine a realistic annualized long term inflation rate in the country you want to retire.
Risk and reward go hand in hand. The more risk that you are prepared to take increases your chances of a greater return on your investments. However, it also increases the volatility of a portfolio and the chance of loss.
If you have a final pension scheme, obtain an estimate of its value from your plan provider. This should be the benefit that it pays you per year. You should get this sent to you every year.
If you have a personal pension, what is the value of the total fund pot. You can obtain this by calling your provider. This may be a personal pension or one that you contributated through a company that you worked for.
What is the value of your existing investments that you plan on using for retirement
What is the anualised rental income that you are receiving today. The calculator will inflate this for you.
If you are currently saving for your retirement, please include the monthly figure that you are saving.
If you're on track, Congratulations! Make sure that it remains this way. Contact me so I can make sure that your investments are being managed correctly and you are taking the correct level of risk.
If you're not don't panic and don't bury your head in the sand. Saving an affordable amount regularly is a fantastic starting point that can be built on. Contact me to find out how.