Planning For a Long and Happy Retirement - Financial Planning

Often when people think or talk of retirement planning, what they have in mind is the financial planning and nothing more. Even then, many do not think beyond "when do I get the state pension" and barely touch upon how much will it be, and how on earth can they survive on that pittance of an income.

Of course, what your pension will turn out to be will depend on a number of things:

1. Where you live, as pensions vary greatly from country to country, and many poorer countries have no state pension at all.

2. Whether or not you have an additional private pension plan, the level of investment you are allowed by law, and

3. How much of that you take advantage during your working life. Basically, the more you earn, the more you will likely be able to invest in your private pension. Those who will fare best, when retirement finally comes around, are those who take full advantage of their ability to reach a maximum pension by the time they retire.

However, even if we only consider the financial aspects of retirement planning, there is much more to it than pensions. At the time your retire, there are other financial considerations which could, with bad planning, completely overshadow your pension. The retirement you may look forward to for many years can so easily become a financial, and thus personal, nightmare.

Non Pension Considerations in Retirement Financial Planning

Whichever way you look at it, even if you have had a long working life and taken maximum advantage of building a pension, when retirement day comes, your income will drop. This means that anybody who is going to be stuck with the same level of financial commitments each month as before, is in serious trouble unless they have been living well within their means for a long time. The sad fact is, millions of people in the US and UK especially do not live within their means.

Here are some of the key elements to bring into your financial planning for retirement, at the earliest possible stage in your working life:

1. Plan to have no mortgage on your main home by the time you reach retirement. Ideally, reach that stage 5 years or more before retirement. You can then retire with no monthly rent or mortgage payment, and have the opportunity to build up some extra savings.

2. Get out of the habit of using credit cards long before you retire. Their use could cripple your retirement finances, and you do not need them. For convenience, use debit cards.

3. Work out a retirement budget a few years in advance, so you can face up to and deal with the reality of your new financial position when you retire. It may seem premature to work out a budget 10 years before retirement, but it will help you see what things could be like, and at least give you some time to do something about it if things look grim.

4. Start thinking well in advance about what you can do to earn extra money after retirement. If you have useful knowledge and skills, then they can still be put to good use after you retire.

5. While working, save as much as possible, and invest wisely with a long term view. Investment can make a good hobby for those who take it seriously, and you may even find you could continue to grow your personal wealth after retirement.

6. If you have a second home, say a weekend or holiday home, then consider renting out one of those properties after you retire to provide extra regular income.

Of course, there are so many other things you can do to ensure a happy retirement, both financial and non financial. The non financial planning you can do is covered elsewhere on this website, and further articles on retirement finances will appear from time to time.