Retirement Planning Strategies

In another article, I proposed against retirement. But if one wants to retire, then he should have a retirement plan to start with. Foremost thing is that one should know and understand as to from where one's retirement income is coming from. One can have different sources of retirement income. People have to understand how they are to manage their retirement funds.
Before one concentrates on different sources of income, it is necessary that one has an idea about one's requirements. One should be quite clear about the mount of money that one needs after retirement. Apart from living expenses, there are health related expenses and these could turn out to be substantial.
Savings
Retirement savings are obviously the biggest source of retirement income. How one manages these is very important. The three major retirement income options available to everyone are:
• A Retirement Income Fund
• An Annuity
• A lump sum withdrawal in cash
Retirement Income Fund
This is a very flexible option. Under this, one can make and change one's portfolio in any possible way. One is free to hold or to sell one's holdings at any time. With a Retirement Savings Plan, one will have complete control over retirement savings, choice of investments, tax deferred growth and liquidity (easy withdrawal of savings).
Those who have several retirement savings plans will be better off to lump them together in one retirement income fund.
Converting to Annuity
Easy to understand and administer, this option of managing one's retirement savings can provide a stable and guaranteed income for a specified period of time or for life. There is a fixed rate of interest associated with this. There are many annuity choices and plans available from which a retiree can make a selection.
The only consideration is that an investor under this forgoes any claim for further adjustments and for taking advantage of higher rates of interest. If one chooses an annuity for life, one can never know how long he will be able to live. In case of an early death, all savings will tend to be lost and the annuity provider gets all the money.
An annuity needs to be purchased. This is an excellent option and different alternatives need to be evaluated.
Lump Sum Withdrawal in Cash
One can also get a lump sum payment and then he is free to decide what he will do with the same.
Choice of An Option
Whatever the outcome, one should be in a position to change the amount of withdrawals in future, change the periodicity of payments, be able to withdraw any extra income over and above periodical payments and has an option to transfer.
One factor to consider is the comfort level that one is good at. Some persons would prefer peace of mind and would not allow to be disturbed by everyday fluctuation of the market or botheration of periodic management of one's portfolio. An option has to be chosen accordingly.
Mutual Funds have been an important source of investment. That option is also available to a retiree and there are all types of them. Many mutual funds provide higher returns.
One can also have a mix of the above. It all depends upon one's needs and the amount of funds available.
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Warm Regards,
Sanjeev