Financial Retirement Planning


Ten Years to Retirement-Are you Ready

Ten Years to Retirement-Are you ReadyTen years to Retirement – are you ready: Most people do not think about this aspect of retirement. They just know that they want to retire and they cannot wait until they walk out the door from the office. However it is always a good idea to plan your retirement in all aspects. Planning 10 years in advance seems like a long time ahead of time, however with a 10 year window you may still have time to fine tune and make adjustments to your financial plan to get ready for your retirement.

This assumes of course you do not wait until 10 years before retirement to suddenly start saving for retirement. All of us should save for retirement starting with our first job and then when we get close to retirement,. We just need to find tune things to be ready for our leisure years. Saving from when you start work means that you have money working for you and increasing your retirement nest egg for a much longer period of time . If you only begin 10 years before retirement you will have to save relatively large amounts of money.

Ten Years to Retirement-Are you Ready: Meet With Your Financial Planner Now

If you do not have a financial planner, it might be a good idea to find one and ask them for help in evaluating whether you are ready for retirement or not. Financial planners will provide this service  as a free service with the understanding that you will give them some business and either transfer your investments to them or begin investing with them. They get paid through commissions on any investments you may make through them.

We strongly believe on diversification, not only of your investments across mutual funds, stocks and bonds, but also across investment advisers. Never place all of your investments, especially your retirement funds, in one investment or with one investment adviser. There just has been too many stories of seniors being ripped off by people and/or the investments not doing well. You just have to recall Enron or the market crash of 2009 to know what the potential impact is. Ten Years to Retirement-Are you Ready?

Financial Planning Tools

Most good financial planners will have various tools available that can be used to develop a profile for you. They can also develop a  cash flow for you well into your retirement years based on your income, current savings, planned retirement date and expected life span. In addition you and the financial planner will make assumptions about the level of inflation and the amount of income you should expect for your investments. Most will error on the safe side of the assumption to provide you with a conservative estimate.

A combination of graphs and reports should be expected and you should be able to quickly see whether you have sufficient savings and retirement pension income to assess your financial health in retirement years.

It is never too soon to do one of these plans, however 10 years in advance of retirement is a good time to take stalk of your financial health.

Make Adjustments and Get Ready for Retirement

Doing a financial health assessment 10 years in advance of retirement provides you with sufficient time to make adjustments and get ready for retirement. As we said before this assumes you already have savings and are not starting at the beginning.

For example you might find that you need to work an extra year or so to achieve your financial objectives, or you may find that by increasing your savings rate, you can actually retire earlier than you thought from a financial perspective. Of course there are many other issues to take into account other than finances. Focus on these separately to make sure you are ready for retirement.

With this assessment you will have a clear picture of what you need to do to get ready. However you are not done yet. Be prepared to re-evaluate your financial plan every year and also after any major change in your life. You may find that no changes in your approach is necessary. On the other hand if inflation is high, interest rates change significantly etc, you may need to make adjustments to your plan. This is all good and part of every day normal planning for your financial adviser. In fact he or she should be encouraging you to review your plans every year.

Retirement Earlier Than Planned

Some of us are forced into retirement earlier than planned for a variety of reasons. For some it is health issues, for others it is the economy and our companies needs to down size. What ever the reason, you need to be prepared financially for this kind of thing. Although it is not fair or nice, it is reality and the only person who will look after you is yourself.

If you are faced with this situation, some belt tightening is probably in order. You should quickly re-assess your plan, then decide what you need to do re getting a job or developing additional income if it is needed.

A word of caution. In these situations some of us tend to take more risk and go after higher income investments to make up for losses in income. This is dangerous especially when you are so close to retirement. Something is better than nothing which is what could happen to your investment nest egg if you invest in the wrong thing. Discuss this strategy carefully with your adviser and ask for more than one opinion. You should have spread your investment across several adviser, so use then to gather various opinions.

Comments on this blog are welcome and encouraged. Ten Years to Retirement-Are you Ready?

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