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CHAPTER 7 - RETIREMENT PLANNING : - Coggle Diagram
CHAPTER 7 - RETIREMENT PLANNING :
1. RECOGNIZE THE IMPORTANCE OF RETIREMENT PLANNING
Retirement Plan
Set your goals - at what age and how much money will you need when retire?
Pitfalls in retirement planning - starting too late and putting away too little
Misconceptions about retirement planning - thoughs of expenses will decrease, saving will not help and inflation
The importance of starting early - take advantage of the time value of money
The Power of Compounding
Make even small investments become larger given enough time
Earn an interest on the money that have been put in saving account
The Basics of Retirement Planning
Analyze your current assets and liabilities, estimate your spending needs, evaluate your planned retirement income, increase your income if necessary
take extra job, make sure investments are part of solution, retire later to refine goal, sell assets that have no growth
2. DETERMINE FUTURE RETIREMENT NEEDS
Review Your Assets
Housing - a biggest single asset, and if large equity, a reverse annuity mortgage could provide additional retirement income
Life insurance - can be converted into an annuity
Other investments - review an investments and consider taking the income from them
3. ESTIMATE YOUR RETIREMENT SPENDING NEEDS
Spending patterns, where, and how will change
Expenses (may go down) - clothing, housing, federal income
Expenses (may go up) - life and health insurance, medical, leisure activities, gifts and contributions
4. IDENTIFY YOUR RETIREMENT HOUSING NEEDS
Think about where you want to live and consider the cost of moving
Type of housing - a universal designed home is built to allow for potential physical limitations, if not home may need to be retrofitted
Avoiding retirement housing traps - learn about taxes and the economic profile, and estimate the costs of expenses would be in the area
5. DETERMINE YOUR PLANNED RETIREMENT INCOME
Pension (Government Sector)
Type of pension - Compulsory pension under section 10 Act 227/239, Compulsory retirement at the instance of the government under section 11 Act 227/239, Optional retirement under section 12 Act 227.239, Retirement due to privatisation of a government agency under sections 10 (5) (b), 12A/13 Act 227/239
Type of pension benefits - service pension (monthly payment), service gratuity, and cash award in lieu of leave, when applicable
Private Sector
EPF (employee provident fund), SOCSO, PRS (private retirement scheme)
Saving and Investments
Saving accounts, unit trust, gold, income from online businesses, real estates, and etc
DEVELOP A BALANCED BUDGET BASED ON YOUR ASSESSMENT INCOME
Living on Your Retirement Income
Tax advantages - take advantages of all tax savings retirees because they get variety of tax savings
Investing for retirement - monitor investment and invest some for growth to allow for inflation and increased care costs
Dripping into your nest egg - use savings with caution, since do not know how long to live
Tips to Manage Retirement Planning
Do not touch saving
Diversify your assets
set clear short term and long terms goals
Find out about social security benefits
Estimate money you need to accumulate