There are two components to retirement income planning: Personal Planning and Financial Planning. Personal planning is important because it is the determining factor of your satisfaction with your retirement lifestyle.
Financial planning is crucial because it identifies your sources of income and expenses and establishes your retirement budget, based on your personal plan.
All too often people entering retirement do not place enough emphasis on personal planning to ensure they maximize their opportunities. So take the time now — at an early stage in your planning process — to think about the choices you have about how you would like to spend your time during retirement.
Do you want to volunteer at a local hospital? Take up that hobby you were always interested in, but never had the time to start? Go back to school and pick up a few special interest courses? Start your own business? Travel around the world? Buy property in a warmer climate and spend the winter months there?
These, and many other lifestyle questions based on your preferences, are all important factors to consider when planning your retirement since your choices will drive the financial circumstances that must be meet in order to achieve your goals.
Will you have adequate funds to provide the kind of retirement lifestyle you envision? Remember your income will likely come from three general sources: government pensions, employment-related sources and your own personal investments.
Your retirement will be more enjoyable if your income is structured to fit your lifestyle choices and if you have developed a retirement plan to protect the assets you have worked hard to acquire.
Follow these foolproof steps to retirement income planning:
- Identify & compare your income and expenses to determine any shortfalls or surpluses.
- Review & analyze the various retirement income strategies.
- Review & compare the retirement income options available.
- Develop an action plan.