Determining retirement income goals and what's needed to achieve those goals - you plan during your active working years, and not wait to get to retirement before planning !!
Creating a retirement plan begins with determining your long-term financial goals and tolerance for risk, and then starting to take action to reach those goals. The process can begin anytime during your working years, but the earlier, the better.
The process of creating a retirement plan includes identifying your income sources, adding up your expenses, putting a savings plan into effect, and managing your assets. By estimating your future cash flows, you can judge whether your retirement income goal is realistic.
A retirement plan is not a static document. You’ll need to update it from time to time as well as review it to monitor your progress.
RETIREMENT PLANNING STEPS
Retirement planning has several steps, with the end goal of having enough money to quit working and do whatever you want. Our aim with this retirement planning guide is to help you achieve that goal.
1. Know when to start retirement planning
When should you start retirement planning? That's up to you, but the earlier you start planning, the more time your money has to grow. That said, it’s never too late to start retirement planning, so don't feel like you've missed the boat if you haven't started.
Even if you haven’t so much as considered retirement, every cedi you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.
2. Figure out how much money you need to retire
The amount of money you need to retire is a function of your current income and expenses, and how you think those expenses may change in retirement. For example, consider what in your life you'd still like to keep, such as vacations and dinners out, as well as what costs might stick around, such as car and home maintenance costs.
3. Prioritize your financial goals
Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund.
It's a good rule if thumb to save for retirement while you're building your emergency fund - especially if you have an employer retirement plan that matches any portion of your contributions.
4. Choose the best retirement plan for you
A cornerstone of retirement planning is determining not only how much to save, but also where to save it. There is no single best retirement plan, but there is likely a best retirement plan - or combination of retirement accounts - for you. In general, the best plans provide tax advantages, and, if available, an additional savings incentive, such as matching contributions.
5. Select your retirement investments
Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of retirement investments depends on how long you have until you need the money and how comfortable you are with risk.
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