What are the stages of retirement planning?

The three stages of retirement planning are young adulthood, early midlife, and later midlife. In young adulthood, people have time to allow assets to develop, while in early midlife, people need to continue saving despite additional financial burdens such as mortgages or school loans. Later midlife is when people have limited time to save but may have higher salaries which means they can invest more.

What are the important factors to consider during retirement planning?

In retirement planning, you should consider your spending needs, how long you have until you retire, and your personal risk tolerance versus your investment goals. You may also want to consider how taxes affect your retirement income and how your assets will be distributed after death.

How much money will I need for retirement?

Experts have several ways to calculate how much you must save for retirement. You can use the 4% rule, which involves withdrawing 4% of your initial retirement savings annually to cover your expenses for the next 25 years. You can also prepare 80 to 90% of your annual income to cover your retirement expenses. Whichever option is selected, the general rule of thumb in retirement planning is the more expected expenditures in the future, the more savings must be invested in the present.

When should I start retirement planning?

It is never too early to start retirement planning. The sooner you start, the more time you will have to save and prepare for your future.

Why is retirement planning important?

Having a significant amount of money saved for retirement will guarantee a secure lifestyle in the future. Retirement planning allows you to be financially independent in the future, so you do not have to rely on your children, grandkids, or other family members.

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Retirement Planning Overview

Written by True Tamplin

Reviewed by Subject Matter Experts

Updated on 2/2/2023, 2:00 AM

What Is Retirement Planning?

Retirement planning is the process of learning about, selecting, and executing financial solutions that will allow you to prepare sufficient funds for a comfortable and secure retirement.

Planning for retirement begins with knowing your financial goals and finding the means necessary to accomplish them. It also involves identifying sources of income, estimating future expenses, developing a savings program, and managing assets and risks.

Although this process can be intimidating, it does not have to be difficult. By starting early, considering all the crucial factors, and following the steps needed, you can prepare adequate resources for retirement.

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About the Author

True Tamplin

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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