Planning for retirement is vital for enabling people to enjoy a good quality of life in the future, after their retirement. No one can work forever and it is unwise to fully depend on social security. Hence, according to financial experts like Kavan Choksi, planning for retirement is extremely important. Most experts additionally recommend people to invest aggressively when they are younger, and gradually dial back to a more conservative mix of investments as one starts to approach their retirement age.
Kavan Choksi briefly mentions the steps involved in retirement planning
People work hard throughout their young years to earn enough money to enjoy their post-retirement time in peace and comfort, without being financially dependent on anyone else. When exactly a person ultimately retires depends on a number of factors, including how much time it takes them to accumulate enough money to substitute the income they receive from working.
Retirement planning includes multiple steps, and has the end goal of having enough money to quit working and do whatever one wants to do. It’s important steps involve:
- Know when to start retirement planning: When exactly should a person must start retirement planning would largely depend on their specific income. After all, not everyone earns the same or has a similar amount of expenses. However, it is vital to remember the earlier one starts to plan and save for retirement, the more time their money has to grow. Nonetheless, it is never too late to start retirement planning. Even if one has not started saving for their retirement yet, every dollar they can save from now would ultimately prove to be beneficial later in life. Investing in a strategic manner can make sure that one would not be playing catch-up for long.
- Figure out how much money is needed to retire comfortably: The amount of money a person requires to retire would depend on their expenses and the type of lifestyle they desire post retirement. The retirement goals of one person would differ from the other. Some may want to travel the world, while others may simply want to spend more time if their family. Hence, depending on their particular goals, one can determine how much money they need to retire comfortably.
- Prioritize financial goals: Retirement is usually not the only savings goal of a person. Many people have more pressing financial goals, like paying off student loans or credit card debt or even building up an emergency fund.
- Choose the best retirement plan: Determining not only how much money one can save, but also where they can save it, tends to be the cornerstone of retirement planning. No single retirement plan can be considered to be the best. But in general, good retirement plans ideally provides tax advantages. Determining the perfect mix of investments relies on how long one has till they need the money and how comfortable they can be with the risk.
Kavan Choksi mentions that with a structured plan in place, one would be better equipped to handle various factors like emergencies and surpluses, and progress to achieving their retirement goals. They would also be able to gain more control over their cash flows, and understand what level of risk has to be taken to achieve all the financial goals.