Retirement Planning on face value seems simple. After all isn’t just about saving enough money to live off in your twilight years? If only it were that simple. In this article I want to explore the different issues that you need to factor into your planning.
ISSUES FOR LONG-TERM PLANNING
When most people think about long-term planning they usually think about retirement. Planning for retirement involves careful consideration of a range of issues that can impact your decisions. Here are some of the main considerations:
Income – how much income do you need in retirement? Where will this income come from? How much capital do you need in order to generate that income? How long will it last? In retirement, you need assets in order to generate an income. Whilst many rely on the Government, this is often small payments and hardly reliable in a world where Governments have accumulated such vast debts.
Location – As a financial planner I saw a number of trends. A number of couples would downsize and move to a new area, often coastal. Whilst this sounds good in theory, often it led to loneliness and isolation. Before moving consider the following:
➢ Is there a good Church you can attend?
➢ Can the kids and grandkids come and visit easily?
➢ Do we feel God is leading us to move?
➢ Is it near a hospital?
➢ Is it a community where we can make friends?
Health – As we age our health deteriorates, so we need to consider how we will pay for our health needs. Where we will access health services?
Family – most of use desire living near our family. We may also need them for support.
Longevity – thanks to medical science we are now living more than 20 years longer than 100 years ago. This has significant ramifications for
Inflation – inflation reduces the purchasing power of your money each year. Over the course of a 20-year retirement, the cost of living will double.
Capital Preservation – when you cease earning an income, protecting your capital becomes a higher priority.
Tax – taxation will impact how long your capital lasts. Christians need to pay taxes honestly. However there is nothing wrong with legally minimising it.
Estate Planning – do you know what will happen to your money when you die?
Social Security – are you eligible to receive financial support from the Government?
Access to Capital – some financial products lock up your capital and will mean that little to no money is left for your estate when you pass away.