Planning for retirement is an ongoing process of establishing realistic goals and managing financial assets to accomplish those goals. Individuals not yet retired will spend their working years accumulating the assets needed to finance their goals. Retirees focus their attention on maximizing current income and making their retirement savings last throughout retirement.
As a general rule, people will need approximately 80% of pre-retirement income to meet expenses during retirement. Social Security and employer sponsored retirement plans may not be sufficient. The long-term effects of inflation are likely to continue to erode retirees' purchasing power, and must be a planning consideration. As life expectancies increase, income must be provided for longer retirement periods. The high costs of long-term care and nursing home expenses can shrink retirement assets.
To overcome these obstacles, the retirement planning process must take into account the following factors: |
