Free Personal Financial Statement Templates have been helping out individuals to keep
finances on track. Well, if you have foresightedness for the future & want
to secure it financially, let us help you out with a handful of tips to make it
till you get old.
Key Takeaways
- Determining time horizons, estimating expenses, calculating required after-tax returns, assessing risk tolerance, and doing estate planning are just a few things that should be included for retirement planning.
- Once you start getting advantage of the power of compounding, you should start planning for retirement.
- Studies have shown that younger investors are ready to take more risks with their investments as compared to investors close to retirement are more conservative.
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Let’s build a solid retirement plan for you…
1.
Build an understanding of time horizon
Your current age and expected retirement
age create the initial groundwork of an effective retirement strategy. The
longer the time between today and retirement, the higher the level
of risk your portfolio can withstand. If you’re young and have
30-plus years until retirement, you should have the majority of your assets in
riskier investments, such as stocks.
2.
Determine the amount you’ll need for retirement
Accurate retirement spending goals help in
the planning process as more spending in the future requires additional savings
today. “One of the factors—if not the largest—in the longevity of your
retirement portfolio is your withdrawal rate. Having an accurate estimate of
what your expenses will be in retirement is so important because it will affect
how much you withdraw each year and how you invest your account.
3.
Calculate the after-tax rate of Investment Returns
Once the expected time horizons and
spending requirements are determined, the after-tax real rate of return must
be calculated to assess the feasibility of the portfolio producing the needed
income. A required rate of return in excess of 10% (before taxes) is normally
an unrealistic expectation, even for long-term investing. As you age, this
return threshold goes down, as low-risk retirement portfolios are largely
composed of low-yielding fixed-income securities.
4.
Assess Risk Tolerance vs. Investment Goals
You need to make sure that you are
comfortable with the risks being taken in your portfolio and know what is
necessary and what luxury is. This is something that should be seriously
talked about not only with your financial advisor but also with your family
members.
5.
Stay on top of estate planning
Estate planning will vary over an investor’s
lifetime. Early on, matters such as powers of attorney and wills are necessary.
Once you start a family, a trust may be something that becomes an
important component of your financial plan. Later on in life, how you would
like your money disbursed will be of the utmost importance in terms of cost and
taxes.
You may also try affidavit format or Non-Disclosure Agreement Form for free with us!
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