Retirement planning should be a key part of your overall financial planning. A major challenge in preparing for retirement involves planning for life many years into the future, sometimes four or five decades from now. Unfortunately, people often get so overwhelmed at the prospect of saving or preparing for an unknown future that many end up not doing anything at all. Think about the kind of life you might want in the future. How do you want to live after you retire? Take a moment and write down your hopes and goals. Remember, having realistic expectations will help you define what you need in the future, particularly the size of your retirement portfolio. Taking the time and effort to master several financial planning principles will be worth the effort if you want a healthy financial future.

1. Darrach Bourke

2. Retirement planning should be a key part of your overall financial
planning. A major challenge in preparing for retirement involves
planning for life many years into the future, sometimes four or
five decades from now. Unfortunately, people often get so
overwhelmed at the prospect of saving or preparing for an
unknown future that many end up not doing anything at all. Think
about the kind of life you might want in the future. How do you
want to live after you retire? Take a moment and write down your
hopes and goals. Remember, having realistic expectations will
help you define what you need in the future, particularly the size
of your retirement portfolio. Taking the time and effort to master
several financial planning principles will be worth the effort if you
want a healthy financial future.

3. Upon retirement, you will continue to have monthly expenses that
won’t go away because you retired. For most people, the highest
monthly cost will be housing. Many people still have to meet
mortgage payments after retirement. After housing comes
healthcare, because most retirees have to meet monthly insurance
premiums and incur out-of-pocket expenses, even with Medicare.
Even in retirement, you will need money for food, transportation,
and personal care. Factor in a bit of fun, and you will be surprised
at how quickly the numbers climb. That is the monthly number
you need to plan for well ahead of retirement.

4. “Pay yourself first” is an often repeated mantra in personal
finance. No matter how low your monthly salary may seem, how
much you owe in credit card debt or student loans, it’s considered
prudent to find some amount in your budget, no matter how
small, for an emergency kitty every month. For emergencies,
having some money helps you avoid dipping into the funds you're
setting aside for retirement. Put the savings somewhere they can
continue earning income or interest, such as short-term
certificates of deposit (CD), a savings account, or a money market
account - otherwise, inflation will continually erode its value.

5. Factor in taxation when planning for a retirement portfolio.
Typically, your investment returns are taxed depending on the
nature of the retirement account you hold. Therefore, the actual
rate of return should only be calculated or estimated on an after-
tax basis. Determining your tax status when you are likely to
begin withdrawing your funds forms an essential component of
your retirement planning process.

6. It is impossible to tell what the prices of commodities will be in
the future. Therefore, when planning for the future, think of
higher prices. As you factor in expected inflation, remember that
some of the most expensive outlays, such as childcare costs or a
mortgage, may no longer exist, which could translate into reduced
overall expenses as you come close to retiring.

7. To have a balanced retirement plan, include estate planning and
insurance. These two components may require the guidance of
different professionals, such as accountants or lawyers. Having
life insurance coverage and a proper estate plan ensures that you
won’t face legal tussles in retirement and that after your
departure, your loved ones will not face financial hardship or a
lengthy probate process.