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RETIREMENT PLANNING - Coggle Diagram
RETIREMENT PLANNING
(Objective 1): Recognize The Importance Of Retirement Planning :silhouette:
Set Your Goals
At what age do you want to retire?
How much money will you need?
Pitfalls in Retirement Planning
Putting away too little
Investing too conservatively
Starting too late
Misconceptions About Retirement Planning
Saving just a little bit won't help
My retirement will only last 15 years
My expenses will decrease when I retire
The Importance Of Starting Early :!!:
Wait twenty years until age 45 and you'll have only $201,000 at age 65
Wait ten years until age 35 to start and you'll have about $550,000 at age 65
If from age 25 to 65 you invest $300 a month (9%), at age 65 you'll have a nest egg of $1.4 million
To take advantage of the time value of money
(Objective 2): Determine Future Retirement Needs :smiley:
Review Your Assets
Other Investments
Review investments and consider taking the income from them (or receiving the dividends rather than reinvesting them)
Life Insurance
Life insurance cash value can be converted into an annuity (or decrease face value which reduces premiums and gives you additional income)
Housing
If large equity, a
reverse annuity mortgage
could provide additional retirement income
A
reverse annuity mortgage
is a loan that is secured against the value of your home, it allows you to cash in some of your home's equity without having to sell or move out.
If owned, probably your biggest single asset
(Objective 3); Estimate Your Retirement Spending Needs :explode:
Some
expenses may go down
or stop
Spending patterns, where & how you live will probably change
Work expenses - less for gas (fuel), lunches out
Retirement Living Expenses :star:
Estimate which
expenses may go up:
Expenses for leisure activities may go up (vacation, haj, umrah)
Life and health insurance unless your employer continues to pay them (government sector)
Medical expenses increase with age
Inflation will cause your expenses to increase over the course of your probable 16-25 years in retirement
(Objective 4): Identify Your Retirement Housing Needs :check:
Think about where you want to live (climate, people, activities, transportation, taxes)
Consider the cost of moving and the social aspects of moving (proximity to children, relatives or good friends)
Type Of Housing
If not build using universal design, home may need to be retrofitted
Continuing care retirement community provide increasing levels of care
92% prefer to stay in their own home
Avoiding Retirement Housing Traps
Learn about taxes and the economic profile
Check on sales taxes, and taxes on pension income
Rent for a while instead of buying immediately
(Objective 5): Determine Your Planned Retirement Income :<3:
PENSION (GOV SECTOR)
Gratuity (lump sum)
Monthly pension
Cash Award in lieu of Leave (lump sum)
Types of Pensions:
Optional Retirement Under Section12 Act 227/239
Compulsory Retirement at the Instance of the Government Under Section 11 Act 227/239
Compulsory Pension Under Section 10 Act 227/239
Private Sector
PRS (private retirement scheme)
EPF
SOCSO
(Objective 6): Develop A Balanced Budget Based On Your Assessment Income :fire:
If you have the skills and ability start some small businesses
Make sure you receive all retirement income to which you are entitled
Develop a spending plan for retirement
Tax Advantages
Take advantage of all tax savings retirees
Investing for Retirement
Monitor your investments
Dipping into Your Nest Egg
Dip into savings with caution, since you do not know how long you will live