Parents Need To Answer These Questions About Retirement Planning | ExpatWoman.com
 

Parents Need To Answer These Questions About Retirement Planning

Here are some questions to ask yourself when retirement planning.

Posted on

26 July 2015

Last updated on 14 May 2018
Parents Need To Answer These Questions About Retirement Planning

The fact is, the cost of living will continue to rise whether you retire or not. For most people the costs associated with retirement years are not the prime concern, it’s the question of how to afford these costs that poses bigger challenges. No retiring parent wants to depend on their children’s income, or perhaps in worst case, leave financial burdens behind for loved ones.

Retirement Planning and taking stock of your finances early can alleviate your future concerns and those of your loved ones.

Here are some questions to ask yourself when retirement planning:

How is your financial situation?

Take time to assess your financial situation and break down the details.  Calculate how much savings you have and how much you need, and how you expect your investments to perform in the future. Take stock of any debts you have and locate your potential sources of income. You can always improve your financial situation by saving from as early as possible.

When do you plan to retire?

Some people like the idea of retiring early whereas some would prefer to work as long as they can. Other people like to work passively after retirement to keep that habit of working, while also drawing some form of income from it. Unless you have hefty savings and your investments are set to yield large sums, retiring early may not be an option for you. Your retirement date should take into account your financial situation.

Will you have some form of income during retirement?

One way of maintaining a steady source of income is to have investments (example, immediate annuities, insurance) having regular payouts. You might also consider taking up part-time or passive work to maintain an income source.

Where do you plan to live after retirement?

Some people downsize after retirement – moving to either different locations where cost of living is lower or perhaps moving to a modest accommodation that caters to reduced needs of the retirees. Ideally, this should correspond with your financial situation.

What are your monthly living expenses?

Monitor your average living expenses against your current income, and then estimate your future expenses against future sources of income. In order to have an idea of the sum required for a comfortable lifestyle during retirement years, retirement planning needs to also take into account inflation.

Are you planning for yourself and your spouse?

Life expectancy has increased considerably over the past 50 years. People living longer means that retirement planning needs to account for possibly 20 – 30 years. If you are retiring with your spouse you need to provide for two people, hence your retirement planning needs to make provisions for it.

Do you have health issues to consider?

If you have a preexisting medical condition that could get worse as you age and require treatment, you need to make provisions for medical expenses and care. The challenge is that you cannot predict the extent and duration of medical treatment, and hence it becomes imperative to set aside some money specifically keeping in mind your health issues.

Have you set aside emergency funds?

The sad reality of the world we live in is that disasters, catastrophes, accidents and the like are common words used every day. Setting aside money and insuring yourself and your loved ones will help prepare for life’s uncertainties.

So, do you have enough money to retire comfortably?

In summary, by raising these questions and working towards the answers, we are making sure we have enough for our old age when our primary source of income would have already expired. Without the retirement planning early on in life (saving and investing), retiring in this day and age can be financially challenging. Effective retirement planning can make sure you and your loved ones don’t face any financial challenges, and even help you leave behind a legacy for your children.
 
 

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