Essential Retirement Planning - Your Complete Guide to a Successful and Secure Retirement by Angelia Griffith - HTML preview

Retirement Plans Common Potential Issues

Retirement from paid employment, active money making or pursuit of other of life's endeavors is an inevitable road all of us must travel one day. It is not whether we would but when. It is like the proverbial statement - regardless of how fast we run, we cannot outrun the buttocks.

Like many rather important things in life, retirement is one of the hard things for people to even contemplate not talk of deliberating planning for and anticipating it. Everyone wishes they could wish retirement away.

Meanwhile, thinking, planning and working a retirement programme is something we should not just start doing, we should actually start working at a retirement programme right before we start working, accelerate when we start working and begin investments and diversification long before retirement is due.

Some people make the mistake of waiting, shifting the day they would start, all out of fear of the unknown, confusion and lack of information.

For the benefit of those who are in search of information, here are some common potential issues that hinder, frustrate or in one way or the other affect retirement plans. In my opinion, though, these same issues should be the reason, the motivation and the push for starting out early to plan and implement an retirement programme:

• Many People turn 60-65 unprepared for retirement - unless you start today and especially if you are contemplating paid employment as your career path, you could easily find yourself among those who turn sixty or sixty-five years of age and totally unprepared for retirement. No worse disservice can anyone do to themselves and their loved ones than to wake up at the year of retirement only to find out that you are unprepared for it.

Even in this era of compulsory Retirement Savings Account otherwise known RSA, an RSA is not an adequate preparation for retirement. Early retirement planning which I advocate requires that through the period of paid employment, one is actively involved in savings and investments and learning of business skills to retire to.

A number of fine men and women have finished their service life and gained access to their gratuity and pension. Having made no plans and having learned no business skills, they have lost their gratuity which is their last resort in business ventures they did not know anything about.

This has led them to perish for lack of knowledge of what to do with huge amounts of money without previous knowledge.

• Employees don't understand finances and investments - majority of people who started their lives in paid employment do not have any element of financial intelligence. This is a big challenge for such people when the issue of retirement is the subject.

They cannot imagine having to leave the comfort of paid employment to the vagary filled environment of entrepreneurship where the management of their economic and financial resources and wellbeing would have to be decided by them. To change the situation, employers and employees should work together to provide and access financial intelligence training, finance and investment opportunities available in the country or economy.

• Lack of Social Security and where available is broke and broken - most countries that operate the social security system are always having problems where to find the taxes and funds to sustain the social security payments. When people think about retirement, they are worried about system failure in the administration of social security in those countries where social security payment is available. In America as well as Europe, there has in the last few years been huge challenge with the social security system leading to demonstrations, economic crisis, high debt profile, huge borrowings and defaults.
• Inflation cuts down value of savings - The number vehicle for planning and preparing for retirement is savings. Gone are the days in all countries where people can think about retirement without the individual making efforts to save a substantial part of their income.

Meanwhile, inflation is not the best friend of savings. Even invested funds are not that secure from the depletive powers of inflation. Devaluation of the worth of saved income caused by inflation is a big concern for those who planning retirement. It is usually recommended that people should accommodate the impact of inflation in their retirement savings. This is where the pension systems which encourage employees to save their money with companies that create wealth with such funds are popular. This, also, however, expose the saved funds to high risks as the investment companies fight hard to ensure that the saved income earn more.

• Retirement fund fees - When you save your money with Pension Fund Administrators, they the administrators charge fees for keeping the money in their custody. Some administrators charge high fees, especially when they claim that your money is more secure with them and that they would earn more money for you in the high risk ventures they get engaged in.
• Retirees are worried about outliving their money - Many retirees worry that they may live longer the money they were able to save and whatever investment income that may accrue on those savings. This is more so if the people did not start in time to plan and save for their retirement and if they have their retirement savings in only one nest egg or undiversified investments. This worry is also there if the investments are not doing well.
• Low interest rates hurt retiree incomes - When savings interest rates plummet, retirees get worried that their savings is not growing well enough. Interest rates are always fluctuating. It is not always stable and this a constant source of worry to retirees.