According to a 2019 survey by Fidelity International on people’s readiness for retirement, most households around the world cannot cover their retirement expenses. People across all regions and age groups find retirement planning very complicated and many don’t know where to start.
What is Retirement Planning?
Retirement planning is about determining retirement goals and devising the right financial strategies to achieve them. The strategies entail setting aside enough savings over time and growing them through investment to cover living expenses during retirement. A holistic approach to retirement planning should consider all the financial aspects of life and the lifestyle choices, such as where to live during retirement, when to quit working, etc.
Retirement planning entails identifying all sources of income (social security, savings, assets, part-time work, etc.), managing expenses (repaying mortgage loans, relocating, downsizing to a smaller house, etc.) and managing assets and risk.
Retirement Projection and Calculation
Planning for retirement should start as early as possible and consider the likely retirement age and the income needed to maintain the standard of living based on current expenses and projected inflation. According to Fidelity, at least 15% of the pre-tax salary should be saved to retire comfortably, but the retirement age depends on when the savings start.
Spending in the first few years of retirement may exceed that during the working years due to more spare time and vacations. Medical and long-term care expenses also increase with age.
Retirement portfolio allocation and diversification are key to readiness for retirement, as they determine investment risks and asset growth. The Family Office website features a financial retirement calculator.
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The Importance of Retirement Planning in Preserving Wealth
Without a sound retirement strategy, many affluent families risk losing their wealth. The lack of planning, bad investments, taxes, lawsuits, family disputes and inexperienced new generations can have a detrimental effect on wealth. Sound financial retirement advice also helps in dealing with other aspects, such as inflation, currency depreciation and financial crises.
The Family Office can help you plan for retirement with bespoke investment solutions that provide ample income to maintain your lifestyle after retirement.