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Critical Decisions for Retirement Planning

Retirement planning is not something which you begin when you are ready to retire. You need to make some critical decisions from the early part of your career if you intend to retire comfortably. You need to consider the kind of lifestyle would like to have. Also, take into account the requirements of your family. In order to begin retirement planning at an early age, you are advised to have a discussion with your spouse. You must consider every aspect of the household to determine the kind of finances you need to have to lead a life that you desire.

Retirement planning basically involves two different phases which are the accumulation phase and the distribution phase. We will look at either of the two to help you understand how you can indulge in retirement planning of the appropriate kind. Making an early start is recommended. Time can easily fly away and you could easily reach a situation where you don’t have the time needed to go through the phases described.

The Accumulation Phase

The accumulation phase begins from the time you begin working until you finally retire. This could be a period of anything between 25 to 40 years. This is also the time when you can set money aside for use during the future. This money when combined Social Security and company pensions [if any] will provide you the income you need after you stop working.

You cannot think about retirement planning for a couple of days and then forget about it believing that you have done everything needed. Remember retirement planning never stops. You have to anticipate changes within your family,  your health, and the kind of retirement you want to have. You even have to factor in the cost of travel if you intend to move around the world. Your children will be ready to go to college by the time you retire and therefore you should have adequate funds to pay for their education.

Setting money aside in a savings account is not going to help you a great deal. Therefore, you will be better off by using the services of a financial planner who can assist you in making appropriate investments. Your objective should be to have a significant sum of money in hand and also to leave something behind for the rest of your family after you eventually retire from life. Having spoken about the accumulation phase let us now discuss the distribution phase.

The Distribution Phase

The distribution phase begins the day you retire from work and stop receiving your paychecks. There is a big difference between the accumulation phase which had a certain time limit and the distribution phase which continues until the day you stop breathing. You may have made investments and saved a significant sum of money but this does not ensure you will not run out of money at some time.

You must be prepared to give adequate attention to the kind of funds you have accumulated. Also, make adjustments as suitable for the conditions prevailing after your retirement. It is highly possible for you to come across situations where inflation is striking hard, your health or that of your family requires more attention. This makes it necessary for you to change some of the retirement plans you had made during the early part of your career.

You need to manage your life within the funds you have accumulated and if the effort needs you to cut back on expenditures of some types you should not be hesitant to take the actions required. You cannot expect any paychecks to come in after retirement. The critical decisions you had taken earlier in life will begin to prove beneficial for the retirement planning you had made.

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