Retirement planning basically refers to a particular process of strategizing specific retirement income oriented goals. It is also a method of making the required plans for implementing the actions so as to fulfill the planned goals and objectives. Retirement planning also includes locating the income sources with the correct estimation regarding the expenses for various managerial tasks. It is a life-long procedure. Hence, it is never too early or late to initialize the retirement planning.
|Benefits of Retirement Planning||Drawbacks of Retirement Planning|
|Provision of peace of mind||Cannot maximize social security|
|Contextualization of retirement decisions||No guaranteed living adjustment expenditure|
|Planning on the same page||Higher healthcare expenditure|
|Tax oriented benefits||Best suited only for the early investors|
|Ensures cost saving methods||Taxation imposed on annuity|
|Keep a check on financial issues|
|Provision of legacy opportunities|
Advantages of Retirement Planning:
• Provision of peace of mind:
This is definitely one of the most strikingly important aspect that an individual can benefit from retirement planning. Pre-planning not just helps in reducing stress and anxiety during the course of retirement, but also in the upcoming years. Without a proper plan, an individual might face a lot of uncertainties coming up in their path leading to unnecessary stress.
• Contextualization of retirement decisions:
If one is seen to take out the time from the daily schedule to strategize a particular plan after retirement, then it can definitely ease the situation. It can help one to make effective career oriented as well as financial decisions with the most appropriate kind of planning.
• Planning on the same page:
With the help of early retirement planning, an individual can definitely ensure the fact that their plans and strategies can work as per the relevant parties. It is never a wrong idea to ensure on a pre-planned notice that a particular individual and his or her partner are on the same page or not.
This should particularly be made sure of while planning the lifestyle comforts as well as necessities right after retirement.
• Tax oriented benefits:
There are a number of tax oriented benefits which one can enjoy from the right kind of retirement planning. This can include the reduction in the amount of the particular income taxes that one has to pay during the course of retirement. Such actions also make sure to provide such beneficiaries to the retirement or any other account types which involve as little tax as possible.
• Ensures cost saving methods:
With the help of an appropriate retirement planning, there are many ways that an individual can earn benefits from.
They include reduction in a large number of expenses. There are many such insurance policies that one may require to gain significantly at lower premium rates along with proper healthcare insurance facilities.
• Keep a check on financial issues:
This is definitely one of the greatest ways which can serve to benefit an individual who has made sure to undertake the right kind of retirement planning. By doing so, one can easily ensure to keep a check on the financial objectives which he or she requires to fulfill after retirement. Such financial goals and objectives definitely should be relatable to one another instead of being evaluated in isolation.
• Provision of legacy opportunities:
Early retirement planning can certainly ensure to provide such advantages to the heir of an individual for a particular charitable cause. Upon the viewing the total amount of legacy, the distribution of the various assets can be planned in the most effective manner.
Disadvantages of Retirement Planning:
• Cannot maximize social security:
No matter how much efficiency is portrayed while constructing a proper retirement plan, it is bound to undergo an income drop. This restricts from ensuring complete social security along with the right amount of pension benefits.
If an individual does not retire on account of disability, then the beneficial amount for such an individual will certainly be less than the complete retirement amount.
• No guaranteed living adjustment expenditure:
The cost of living adjustment basically refers to a particular increase in the percentage of the Social Security beneficiaries. It is entirely based upon the Consumer Price Index. Therefore, a proper retirement planning cannot guarantee a complete cost of living adjustment and the expenditures required for the same.
This is because an individual is bound to undergo a financial pinch if her or she does not ensure to allocate the retirement savings appropriately.
• Higher healthcare expenditure:
The announcement of the no cost of living adjustment was followed by a number of individuals stressing about the sudden increase in the healthcare expenditures. Inspite of having a proper retirement planning, a person is often seen to suffer from a heavy financial burden being created due to increased healthcare expenses.
Similarly, individual with a higher amount of income bracket can definitely witness an increase in the healthcare expenditures.
• Best suited only for the early investors:
For earning the complete beneficiaries out of a proper retirement planning, it is expected that such individuals should start strategizing the same on an early notice.
They should begin such planning when they are still at the stage of being early investors so as to make use of the retirement schemes in the most effective manner.
• Taxation imposed on annuity:
Such taxations which are imposed at the time of annuity can serve as an effective drawback in the retirement plans of an individual. They may be drifted from their path of receiving the appropriate amount of annuity post the retirement period. This is entirely taxable for the receivers.
Retirement planning has therefore been identified as a method of restoring the much needed peace and order of one’s life. This can be done by strategizing the correct ways to get rid of all kinds of stress pertaining to pertaining to financial expenses after retirement. However, not all individuals can earn the benefits from such pre-planned measures because each of them differ in their strategic planning.