Two steps to kick start the financial planning process for your retirement
You probably have a good idea of what you'd like to do once you retire. Perhaps you want to travel. Maybe spend more time with your family. Or perhaps get that fruit and vegetable garden really going. But have you thought about how you're going to get there? More importantly, have you financially planned to get there? Read on to find out what you need to do to get started…
Retirement planning step #1: Calculate your net worth
Before you can even think about your retirement, you need to have a look at how much money you have now, Dave Roos in HowStuffWorks
explains. It all comes down to the financial planning
To calculate how much money you have (or your net worth), firstly you need to tot up all your assets. This includes:
How much money you have in the bank;
The value of your house;
The balance of your retirement accounts; and
The value of your investment portfolio.
Then subtract all your liabilities:
The bond on your house;
Any loans; and
Credit card debt.
Retirement planning step #2: Calculate how much you need for when you retire
You need to think about factors such as:
Things you want to do once you retire;
When you want to retire; and
The standard of living you want when you retire.
To ensure that you give yourself a standard of living you’re accustomed to, make sure you allow for 80% of what you spend on a monthly basis at the moment. But if you have bigger plans, you’ll need more money.
One major factor in your sums will be healthcare. You need to ensure that you have enough money to pay off your medical scheme contributions and cover any surprises.
Use one of the many online retirement calculators to work out how much savings you need to retire by a certain age. It will help you see how and when you can achieve your retirement goals.
So there you have it, two steps to kick start the financial planning process for your retirement.
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