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Retirement Planning - Essay Example

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Retirement Planning

One must consider all your current expenses and how your financial needs and responsibilities will change over time as one approaches retirement age. Once a person reaches retirement age many of your current day to day expenses such as gas, car payments and maintenance, and other family expenses will diminish. Other financial responsibilities will most likely be paid off such as personal loans and mortgage payments, but there are other expenses that will likely increase such as medical expenses and entertainment.
On average conservatively speaking individuals need around 80% of their current income in order to be able to live with the same current standard of living after retirement, but if one plans to do a lot of traveling and entertainment your allocation for retirement income will need to increase to 100% -120% of your current income in order to meet your future financial needs after retirement sets in (Hazell, 2012). By carefully planning and analyzing all your current and future expenses your budget allocation will reflect your future financial needs and be able to plan ahead in order to find out how much extra savings one must allocate every month in order to meet your retirement goals and lifestyle choices. After analyzing my current situation and future needs and wants I determined that I will require 100% of my current income in order to live comfortably and still be able to do some traveling while having enough extra income for entertainment. Based on the premise that an individual who is currently 25 years old with a current income of $55,000 a year, approximate future pension of $20,000, and estimated social security payments totaling $19,019 a year who wants to retire in 40 years by age 65 and with a life expectancy of 80 years old will need an additional $625,300 by age 65 or $184,908 in todays dollars.
In order to maximize my return on investment while maintaining a conservative risk profile for risk adverse investors I will diversify my ...Show more

Summary

Planning for retirement and starting to implement a savings plan as early as possible in our careers is paramount in order to be able to achieve your retirement goals. Starting the implementation as young as possible allows the individual to minimize the financial impact of your…
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Retirement Planning essay example
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