5 Questions That You Should Ask About Retirement Planning

  • June 9, 2019

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5 Questions That You Should Ask About Retirement Planning

If you believe that you can have the best time of your life after retirement, you are in for a surprise. Things can be good only if you have a proper plan in place. Pension planning is perhaps the most critical element of a dependable retirement plan because this is the major source of regular income you will have after getting retired. So you need to have it managed even before you start getting it. Similarly, you may want to make some viable investments to get regular income post-retirement.

These are tricky questions because the future is always uncertain yet the best way to step into it is by being prepared. The best approach would be to seek the guidance of a professional retirement advisor who can explain the nitty-gritty of retirement planning and have a strategy drawn for a comfortable life ahead. Before you meet the advisor, there are some questions that you should have for them to get a good understanding. Let us list them down for you.

How much money do I need to live comfortably post-retirement?

This is a subjective question and the answer depends on individual circumstances such as your lifestyle and spending habits. People who spend little during their working years are likely to retire with a sizable monthly pension, which would probably be enough to sustain a comfortable lifestyle. Others with a lavish lifestyle and less pension need to get smart with retirement planning to support their existing way of life. The idea is to calculate your needs on the basis of these factors and ideate an investment plan that would guarantee a comfortable life later.

How long will my money last after I retire?

Another question that you would definitely want to be answered by an expert is the duration for which your money would last after you retire. Estimating the time frame required complex calculations based on multiple factors such as how long you will live, what will be your expenses, how much pension you get, what will you earn on your investments, what will your tax burden be, and more. Most of these factors are based on projections and require considerable skill to calculate. This is the reason why you should trust an expert to calculate it for you.

Is pension drawdown a good idea?

Since you are enlisting a professional financial advisor to plan your retirement, getting the best pension drawdown advice is possible. With a drawdown, you get the option to withdraw a certain lump sum amount (usually up to a quarter) from your pension pot. The amount withdrawn is tax-free and can be invested elsewhere to match your income objectives for the future. Even though it is a good idea to open alternative income streams, you should still do it with proper planning and guidance related to the investments and taxes.

Should I consider taking my pension as a lump sum?

Besides drawdown, you may also have the option of taking your pension as a lump sum. But this can be a risky prospect if done without analyzing the lifetime outcomes. Considering the life expectancy, you may want to opt for annuity rather than a lump sum amount because it assures a regular income as long as you live. If you think that you will not risk your funds by withdrawing your pension all at once, only then you should take it. The idea is to have a clear idea of your holistic financial picture before you decide the best option in your case.

How much should I save today for a secure retirement?

Retirement planning is all about being prepared for the future by taking the right steps in the present. When it comes to deciding how much to save today for a secure tomorrow, the best answer would be as much as possible. A saving of 10-20% of your income through the working years is ideally recommended for a comfortable retirement, considering that you will get an optimal pension later as well. Making the right investments and keeping off debts are also feasible steps to assure a secure life post-retirement.

Since retirement calculations are most likely to be complex, it is advisable to collaborate with an experienced financial advisor rather than trying to handle it on your own. Of course, there are several tools available for these calculations but they seldom match human expertise. They can assist you with the right decisions at the right time so that you end up with a secure, independent and comfortable post-retirement life that you can enjoy to the fullest.

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