With increase in life expectancy at birth increases the period of retirement. Consequently, it adds to the value of suitable retirement planning. Additionally, changing family systems (from joint to nuclear families), demand for more financial freedom in retirement rather than being dependent on children, there comes the need for retirement planning to enjoy higher inflation adjusted living expenses.
Retirement planning is about ensuring that there is adequate income to meet the expenses in the retirement age of an individual’s lifecycle.
It is important for people in their pre-retirement phase to think about their retirement life and effectively start with retirement planning. Retirement income can’t be limited to pension income. In many cases, it has been seen that pension income isn’t enough for retirees because of poor outcomes due to inappropriate retirement planning resulting in lifestyle and aging stress during retirement phase. This is under-funded retirement phase.
To be fully funded, it is important to deliver yourself a reliable and stable income in retirement phase. To have income security in retirement, a portion of current income has to be saved and invested over the working life of the individual to create adequate retirement fund.
It starts with the adequate retirement fund determination followed by risk profiling and asset allocation of investments to be done for retirement fund needs.