In 2011 we are talking about nuclear family, children staying away from parents due to higher studies and employment opportunities, increased cost of medicine due to advancement of medical science and more stressful life. Parents retiring today are more dependent on their own savings to live through their retired life than getting dependent on their kids. Imagine if this is the scene today, how would be our retired life 15-20 years down the line.

This creates a scary picture in front of us today. To turn your retirement the best period of your life by living for yourself and do everything that you have not been able to do during your working life or to make your retirement a painful nightmare depends on how you plan for it in early years of life.

The common point is money looses its value over a period of time. A rupee value tomorrow will be lower than rupee value today, courtesy monster called inflation. So inflation becomes the single most important factor to plan for retirement.

Now you may argue that one can cut down on his/her expenses during retirement life, but this is easier said than done. Imagine can you travel by a public transport once you retire when for whole of your life you have commuted in your personal car. Can you move to one BHK apartment in suburb when for your entire working life you have stayed in a three BHK apartment, at the center of the city? So rather than putting yourself in a situation where you have to cut down on your expenses it is better to plan for your retirement.

Medical Bills:

Medical cost has become the single most important component of monthly expense during retirement period. With growth in the economy and advancement of medical facilities this cost is only likely to go up with every passing year. Changing lifestyle is also affecting our health. Our previous generations used to walk few kilometers in a day while today we use vehicle even if we want to go to near by grocery shop. Private sector hospitals are coming up with latest but expensive medical facilities. This will surely add to our medical bills going forward.

Life Expectancy:

With better quality of life and medical facilities, life expectancy of average Indian has gone up to 80 years. So if one is retiring at the age of 55 he/she has another 25 years to survive during his/her retired life. This is almost equivalent to his/her working life. This increases importance and requirement of proper retirement planning.

No government Support:

Unlike the US and UK where they have government supported retirement benefit scheme and state pension respectively as social security benefit during retirement, the government of India does not provide such benefits. So again you are on your own.Its only few government employees and selected private sector employees who get pension after retirement, leaving majority of workforce on their own.

Approach towards building retirement corpus:

The basic things to remember is start as early as possible and invest in right asset class. The biggest advantage of starting early in power of compounding.

For e.g. Mr. X and Mr. Y both want to retire at 55 years of age. Mr. X starts investing when he is 25 years of age. So he has 30 years to build his retirement corpus. Even if he invests only Rs.5000 p.m. in equity mutual fund that gives him 15% return p.a. his money can grow to Rs.2.82 cr at the end of 30th year.

Mr. Y starts investing when he reaches 40 years of age. So he has 15 years to build his corpus. He starts with monthly investment of Rs. 10000 in equity fund on which he earns 15% return. Even though his investment value is four times higher than Mr. X his end value would be only Rs.62 lakhs. This shows the power of compounding.

Conclusion:

For every one of us a ten-letter word ‘retirement’ brings images of sitting in the garden of your house with your life partner, playing with your grandchildren while reading morning newspaper. Taking your wife to the vacation on a foreign location every year. To make this reality, one requires proper planning for his/her retirement. Retirement planning will change your mindset from ‘ I want a happy retired life’ to ‘ I will have a happy retired life’.

SIP Mutual Fund, Retirement Planning

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Your retirement planning should be done as early as possible as this will allow you to invest in a wider range of investments. When you are starting your career you can take more risks with your investments and you will have the opportunities to gain higher earnings. On the other hand if you are a bit older you will be looking for more security instead.

Your investment portfolio should be as balanced as possible. Do not place your eggs in one basket. As far as possible you should try to commit in diverse investments such as IRAs and mutual funds. Doing so will get you more flexible against any unfavorable economic conditions.

Those that wish to discover more on this subject can check out this article on most accurate retirement calculator and financial investment as it holds some interesting information.

Sometime a financial adviser can be also very helpful when it comes to investments decision. The person may help us in choosing the most appropriate portfolio according to our age and income range. There are also some banks that offer investment opportunities and this can be a great way for you to gain some advices on this subject.

Retirement planning is a very important component of our life. This will ensure that we have a constant source of income even in our old days. In order to make the most of it there are various investments opportunities that exist and it will be important that we choose the best one.

Published by Janett Brown for RetirementStory.com

Do you want to learn more on the different investment opportunities that exist for retirement planning? Visit our site to learn more on 401k garnishment and financial planning that exist.

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If it means the difference between staying retired and having to go back to work, you will find a way to stay retired and spend much less than when you worked.

Why am I so sure of this…it is because of the money you waste keeping up with the neighbors and co-workers. Think about it, at work how much money you spend on clothes and cars to keep up appearances. You need to recognize this for the best early retirement planning for you.

The scenario goes like this…well Sally and I both make the same money. She is shopping at Macy’s. I’ll show her, I’ll get that dress I’ve wanted at Nordstrom’s. Has a nerve been hit? I did the same thing… now I did not wear dresses just substitute a tailored suit and Bill for Sally. Whew…

If this sound familiar…it will stop when you retire.

Your old clothes fit just fine…besides you need money for fuel to take the RV to Montana…now that’s the way to think and prioritize for early retirement planning

Think of the times you have bought new cars that you didn’t really need. And I am not saying I haven’t done the same thing….but I learned and our current car is 11 years old with 153,000 miles on the odometer. Runs and looks good thank you.

Clothes and cars are the tip of the iceberg. If you are at rung 4 of the corporate ladder a country club membership, a certain type of country club, may be expected of you. Folks, I have not had my shoes shined in 14 years, open toed sandals don’t need polish. You can do this too.

It is not in the financial planner’s playbook to even think about you spending less money, a lot less money, when you retire. It is so easy to say, “well this is what you are doing now and you won’t be happy spending less.”

Really? Compared to commuting and working with people you may not care for is all the motivation you will need to retire early.

You will spend a lot less in retirement if you are motivated to retire. Early retirement planning rarely takes this fact into account. Don’t let it happen to you. Enjoy.

Gary Pierce is the webmaster of http://www.frugal-retirement-living.com he retired early at 49, he is still retired at 63. He has experience in lifestyles that are both fulfilling and frugal. It is 2009 and many are wondering if they can ever retire. Don’t give up until you check out this website. Enjoy.

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Whatever your grand plan is, it is not likely to be turned into reality without proper retirement planning today. Whether you currently have a fantastic paying job with all the perks or a blue collar job with modest pay, the amount of income you have today is not nearly as important as how much you actually set aside. The only way by which you can make a headway towards your grand plan is to start saving now, to device a retirement plan now, and to stay faithful to your financial plan always.

There are retirement planning services that you can tap in order to help you in plotting out your retirement plan and in detailing your financial plan. This involves the services of a retirement planning consultant in whose confidence you can share your long-term financial goals. A licensed financial consultant will be able to guide you in evaluating your current financial condition, in drawing up a financial plan to reach your retirement goals, and to lead you in building a portfolio of investment instruments that can help you realize your financial goals for retirement. There are a whole lot of these instruments available even for small investors. Depending on a number of factors, and with the assistance of a retirement planning consultant, you can decide on which ones of these instruments will best be able to give you the kind of yields for your amount of savings.

Engaging a retirement planning consultant for retirement planning services is not all that difficult. The resources that you need are right here on the internet. Choose only those retirement planning services companies that you can trust and that is willing to keep your own personal financial circumstances, personality, and goals into consideration. Stay away from those who pushes you into making investment decisions that you are not comfortable with. The retirement planning consultant you choose should be able to explain to you the rationale behind certain decisions, to lay down an acceptable financial plan for you, and to keep you in the know of how your investments are moving.

All of these might seem too big and too far out for the simple folk. Simply put, whatever you want to happen to you when you retire will require you to plan and act now. Think about how you want to live your life after retirement and find out what you need in order to make it possible to live as such. And then, seek professional help in choosing which particular investment instruments you can take advantage of today to have enough money for your retirement. The important thing for you to ensure that you will have a great retirement would be to take some action now.

For more information about retirement planning services, please visit: http://www.retirement-planning-center.com/retirement-planning

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At this point, it is imperative that you are informed about the basics of retirement planning and the processes that are involved in coming up with a workable plan at the very least. You need this information in order to do your own introspection into what you wish to plan for and how you envision your retirement to be. There are a lot of variables to consider. You can actually dream all you can about the grandest retirement you could ever want. But, being realistic about your retirement goals is the only way to go. Think about what you want to do after your retirement. Do you want to go on a world cruise with your spouse? Would you want to put up your own family restaurant down the block? Would you want to just be able to spend your mornings golfing and the rest of your day tinkering around the house? Once you determine what you want to happen after your retirement, you can go on further to focus your efforts at coming up with all that are necessary to help you achieve this retirement goal. The financial aspect of your preparation is one of the most crucial parts of your retirement plan.

With the help of a retirement planning consultant from a retirement planning center, or on your own if you are confident about your finance acumen, you can draw up a financial plan in order to make your retirement goal possible. This would involve quite a bit of pencil-pushing for you. You have to determine how much it would take for you to be able to sustain the lifestyle that you want years from now. A good way to start would be to find out how much you would need if you were to retire today and continue living the lifestyle that you desire for the rest of your life. Given this approximate figure, you can then use the inflationary factor to project the amount of money you would need in the number of years from today until your target retirement date. This is the figure that you should be able to accumulate from now until you retire.

The next thing to do is to find an investment instrument that will let you successfully accumulate your retirement income goal. Another factor that comes to play at this point is your present income and the amount that you have in disposable funds. Offhand, if you do not have the financial discipline to put aside a certain amount of money from your income on a regular basis, you are not likely to be successful in your retirement planning. Remember that the more you save now, the more you give your money a chance to grow for your future needs. You can still live the life that you want today without sacrificing all your present pleasures. Cutting back a little on the extras could help you make sure that you are able to enjoy future pleasures as well. It would not hurt to find out exactly how you could do this from a retirement planning center.

For more information about retirement planning services, please visit: http://www.retirement-planning-center.com

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The Need for Retirement Planning
People think of ideal retirement as a combination of leisure activities, financial independence and luxury vacations – all these things are possible only if you have enough money when you retire. To live a comfortable life after you retire, you need financial planning. There are many tools and resources available to help you plan better.

The Basic Steps Of Retirement Planning
* How much money would you need after you retire? – This is dependent on your current standard of living. You need to estimate what your annual expenses will be after you retire. One point to be taken into consideration for this estimation is the difference between the current expenses and retirement expenses. For example, right now a large percentage of your income goes towards your house mortgage and children’s education. But by the time you retire, your children must have settled with their jobs and you would have a home of your own. When you retire, you and your spouse may have increased medical expenses and you would also like to spend money on vacations. Here, you also need to consider inflation. The average inflation rate is around 3%.

* How much would you need to save? – After you calculate the inflow that may come from part time income, interest on the savings and Social Security; you need to estimate the exact value that your assets will have and the income you will earn after you retire. By calculating this, you would come to know the shortfall. Here, there are many factors that need to be considered. At what age you are planning to retire, the number of years you are going to live (depends upon your health) and the return on your current investment. The first two factors roughly determine the number of years of your retirement. While calculating the rate of interest on your investment, take a conservative call and calculate the return based on around 5 to 6 percent. This would enable you to calculate the amount of money you require to save after you retire.

* How to build the retirement corpus? – Once you have determined the amount of money needed to be save each month from now till your retirement, the next step is to find a plan that is just right for your savings needs. Ideally, you should arrange for a specific amount that is directly taken from your monthly paycheck and automatically invested in the financial plan of your choice. This type of arrangement would reduce your impulsive spending habits. You can opt for payroll deduction savings plan or 401(k) plans.

For the perfect financial planning, you need to understand the different savings and investment options that are available to you. This definitely requires a lot of dedication on your part. If you are busy and can not find enough time or do not quite understand the intricacies of various investment plans then it is advisable to hire a financial advisor, to take care of your retirement planning needs. Financial security after you retire is important – you must start planning for it now.

Financial planning is very important if you want to ensure a wealthy retirement for yourself. Free Retirement Membership is an online retirement planning that promotes retirement information.

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Retirement planning is often very intimidating for most ordinary people. The idea of having to put away a lot of money over decades for a time forty years down the road can be difficult and intimidating. Still, saving for retirement is an absolute necessity and something that has to be dealt with.

The good news is that even on a tight budget, there are many ways that an individual can save extra money in order to prepare for the golden years. One of the biggest problems people have with saving is that money that’s not appropriated to anything tends to just get spent. The very moment you get a pay check, make a habit of taking $10-20 out of every single check and put it into some type of account. If you don’t have an IRA, but this into a savings account until you have enough to open an IRA.

This should be in addition to any normal IRA deposits or 401-k contributions. Also, look around to see if you can find a bank that offers checking accounts with interest. If you’re used to carrying a decent amount of cash on hand, this can add up over a year.

Another huge tip is to keep a change jar. This might sound like ridiculously little, but change tends to spend itself. Over a four month period between my sophomore and junior years of college, my change jar was just short of $100. Imagine putting away $300 a year for 30 years into an IRA. It would be pretty amazing how that could add up over time.

The other is to cut the small expenses. If you rarely watch the movie channels on cable, don’t pay extra for them! Don’t pay for a $100 a month cell phone plan if a $70 a month will do, and if you’re making ends meet before these cuts, take half of the money you save, and put it right into a savings account. This way you can save a lot more for retirement and still enjoy a little extra money in your pockets to avoid burn out.

If you would like to learn more about how to save for retirement, please feel free to visit the website, or visit this article on how to increase your retirement savings.

Thanks for Reading.

Shane Dayton

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OK, I’m dating myself, but if you’re my age, this song probably brings back memories from high school or college. In fact, I’ll bet you just got it stuck in your head right now. But can you remember the one-hit wonder band that sang it? (See answer below.)

This song just popped into my head when I was thinking about retirement planning (yea, I know, I’m kinda weird that way) and how, despite all the fancy and exotic investing vehicles that have sprung up over the past decade or so, IRAs are still the bedrock retirement savings tool for millions of Americans.

Many people participate in 401(k) plans offered by their employers, which are great because they offer tax advantages and often an employer match as well. But IRAs can be just as attractive, especially when you consider the flexibility they offer long-term retirement savers and investors.

IRAs were introduced in 1975 as the first government-sponsored, tax-advantaged tool to help average Americans save for retirement. I still remember my mother showing me one of those illustrations when I was in college that show how much money you’ll have when you’re 65 if you start putting $2,000 a year into an IRA when you’re 22 years old.

One of the drawbacks to IRAs in the past was that the contribution limit was $2,000 a year, or just $166 a month. That’s a nice start, but most people want to stash more than this in their retirement accounts. So starting in 2002, Congress changed the rules and started indexing the contribution limit for inflation. Since then, it has more than doubled-to $5,000 a year, or $416 a month. If you’re age 50 or over, you can contribute even more: up to $6,000 a year, or $500 a month.

Types of IRAs

There are two primary types of IRAs to choose from, each with its own features and benefits:

Traditional IRA: The original IRA, now referred to as a traditional IRA, offers tax-deferred growth and an immediate tax break in the form of a deduction equal to the amount of your annual contribution if you qualify. (Eligibility for this deduction phases out above certain adjusted gross income limits and may also not be available to individuals who participate in an employer-sponsored retirement plan.) Taxes must be paid at your ordinary income tax rate when you begin taking distributions during retirement.

Roth IRA: Named after Senator William Roth, who introduced the legislation that created this type of IRA, the Roth IRA differs from a traditional IRA in two key respects: First, there is no tax deduction given for annual contributions. But this is offset for many individuals by the fact that contributions grow tax-free, instead of just tax-deferred. This can make a big difference over the life of the account.

Another benefit of Roth IRAs is that contributions (but not earnings) can be withdrawn tax-free and without penalty at any age. In contrast, withdrawals from a traditional IRA before age 59 ½ are usually subject to a 10 percent early distribution penalty. Therefore, many people use Roth IRAs as both college and retirement savings tools.

Keep in mind that eligibility for contributing to a Roth IRA phases out above certain adjusted gross income limits. If you earn more than $120,000 (if you’re single) or $176,000 (if you’re a married couple filing jointly) in 2009, you can’t contribute to a Roth IRA.

Oh yea, the band that sang “Still the One”? Orleans. Shoot me an email if you knew the answer, along with your favorite memory from the ’70s.

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Until recently, many young Indians in there 20s and 30s were ignorant towards retirement planning and were not taking it seriously. For them, retirement was some thing that was too distant.

However, smart advertisement campaigns by private life insurance companies like ICICI Prudential’s “Retire from Work, not from Life”, HDFC Standard’s “Retire with Pride, Live with Self Respect”, and more recent one from Ageon Religare “How much pension will you need? Know your Correct Pension amount.” have helped in increasing the awareness about retirement planning.

Your retirement planning does not end once you have taken a retirement plan from any of these Insurance Companies. Its just a beginning, and if you start at an early age it is extremely helpful. Still wondering why do you need a retirement plan? Here are some of the reasons :

1. Inflation: Due to inflation, value of money keep decreasing year-on-year, so the value of Rs.100 five years ago was much higher than the value of Rs.100 today. As you need to worry about it, you also need to account for inflation adjusted returns on your investments, while planning for your retirement.
2. Increasing Life expectancy: Increased longevity has been the greatest single benefit to Indian citizens since independence, a benefit spread across all states and income levels. The life expectancy, as on 2007, for males at birth is 67 years and 71 years for females. The globalization of modern medicine and medical practices has globalised high life expectancy too. With advancement in medical technology life expectancy is likely to increase. Result: You will have to fend for more number of years post retirement.
3. Medical emergencies: With age come health problems. With health problems, come medical expenditure which may make a huge dent in your income post retirement. Failure here could lead you to liquidate (sell) your assets in order to meet such expenses. Remember medical insurance do not always suffice.
4. Changing Social Structure: The culture of joint family is changing. Today, an increasing number of young Indians are staying away from their families due to employment. Hence people have to develop a corpus to last them through their retirement without any help from family.
5. Absence of Government sponsored pension plan: Unlike the US and UK where they have Roth IRA and state pension respectively as social security benefit during retirement, the government of India does not provide such benefits. Only 4% of India working population- mostly government employees – are covered by pensions. The remaining 96% comprises self-employed and salaried professionals who do not have a formal, mandated provision for pensions.
6. Job hopping: With youngsters hopping jobs regularly they are unable to get any substantial benefit of plans like super annuity and gratuity. As both these plans require certain number of working years spent in the service of a particular employer.

There’s no easier way to begin retirement planning than by saving through a workplace retirement accounts like Employee Provident Fund and Family Pension Fund and diversify it, on your own, by taking adequate insurance cover and investing in a mix of asset classes.

Start now, Save more, Retire rich.

Shweta is Co-Founder of Personal Finance Blog that provides expert advice on Money Management, Financial Planning, Investment, Insurance, Loans and Personal Wealth Management to effectively manage your personal money.

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You’ve saved for years to accumulate benefits to use throughout your retirement years. Most likely you’ve used government-regulated plans – called qualified retirement plans, company plans, IRAs, etc. – to do so.

But these tax-advantaged retirement savings plans have rules you must follow – both for companies and individuals. These rules prescribe key ages to frustrate early use of those savings and then to force their use later in retirement. You also paid into the Social Security and Medicare programs; they also have their key ages.

Being aware of these ages and what they imply is critical to your retirement planning. Let’s explore them from the earliest to the latest:

Let me first mention that most tax-advantaged savings plans involve tax deductible contributions you make from your working income. These savings then grow tax deferred. When this money is eventually withdrawn, it’ll be taxed as ordinary income. Such plans also include company pension plans – all of which are produce taxable income at retirement.

There are also ‘Roth’ based plans (Roth IRA, Roth 401(k), etc.) that you contribute to only with after-tax working income. These savings grow tax-free – a clear tax-advantage. And when you withdraw from them, the money comes out tax free.

The government offers the opportunity for using such tax-advantaged savings/retirement plans as an incentive for people to save for their retirement – and to lessen their dependence on Social Security benefits. So government sets up rules to penalize early withdrawals from these plans, and more… Let’s check out the rules – by age:

Age 50 – Catch-up age for additional contributions to retirement plans:

The earlier you can begin contributing to your retirement, the better. All tax-advantage retirement plans have limits on how much you can contribute yearly. But when you reach 50 years old, as an added incentive you can contribute a little more – called ‘catch-up’ contributions. Keep current each year for increases in both the regular annual contributions and catch-up amounts.

Age 59½ and age 55 – Age for no more 10% penalty for early withdrawal:

To frustrate early withdrawal of retirement savings, our government imposes a 10% penalty tax on what you withdraw before you turn 59½. But the government has lowered that age to 55 only for those laid off from work so they can access their company plan benefits.

Of course, anything you take out of these plans is treated as taxable income (except for Roth plans) so the 10% penalty is imposed in addition to whatever income tax you’d pay.

Age 65 – Age you qualify for Medicare:

You must wait until age 65 to qualify for Medicare. This is a government-assisted health care system to help the elderly. You must apply for it to receive it. Apply 3 months before turning 65 so you have access to it on your 65th birthday.

Age 65 or your FRA and (ages 62 to 70): Social Security Retirement Ages Sixty-five has long been the official retirement age for business, Social Security, and Medicare benefits. And it still is for Medicare eligibility.

But future insolvency problems with Social Security has made it mandatory to slowly increase the retirement age to receive your full Social Security benefits (i.e. income).

The age at which you get your full Social Security benefits is called your full retirement age (FRA). It’s been slowly increased to 67 depending on the year in which you were born.

Everyone can receive Social Security benefits earlier than their FRA, but their (i.e. the income) is reduced from what you’d get if you waited until your reached your FRA. This reduction increases for each month you begin benefits before your FRA. Generally, age 62 is the earliest you can begin receiving your permanently ‘reduced Social Security income’

On the other hand, government rewards you by increasing your Social Security income beyond your FRA benefits for each month you delay receiving them beyond your FRA. However, no additional benefit is given for waiting beyond age 70.

Age 70½ – After turning this you have minimum required distributions (MRDs) annually:

Lastly, the government wants the tax money for all that ‘untaxed’ retirement plan money you’ve saved. So when you turn 70½, they require you to withdrawal at least a minimum required distribution (MRD) from your plans annually.

Remember that all the withdrawals are taxed as ordinary income. If you withdraw less than your MRD, you’ll be penalized heavily on the fraction of the MRD you didn’t withdraw. So do it; it’s not worth it not to.

Incidentally, Roth plans have no MRD obligations for you. And whatever you take out is tax free too.

Shane Flait writes and consults on financial, legal, tax, and retirement issues. He gives you workable strategies to accomplish your goals. Get his FREE report on Managing Your Retirement => http://www.easyretirementknowhow.com/FreeReportandSignUp.htm, you can contact him at contact@easyretirementknowhow.com

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