When should Retirement Planning Start?

Clients may procrastinate because retirement planning seems too complicated, but one of the financial planner's main goal should be to provide for the client's financial independence in retirement. The longer the time available, the more likely the client is to achieve that goal. Therefore, there is no time like the present to start retirement planning, regardless of the age of your client. The following issues could be taken into consideration when preparing financial plans for clients who are in their 40s, 50s and 60s:

·         acquiring sufficient wealth to retire.

·         using preset assets to acquire an income stream during retirement.

·         Considering the length of time spent in retirement to assess the amount of money needed; and planning to work part-time or be self employed.

Retired people are continuing to be in the workforce by taking part time work. At the same time, the average number of years people are in full employment is shrinking through redundancies and early retirement. People retiring now can look forward to a much longer healthier retirement, but should not rely on only occupational pension. The way to start planning for retirement is to decide on realistic amount of income that will be needed to live on in retirement. One planner uses a basic four step retirement needs analysis to show clients how they will be PAID in retirement and to help the  to approach retirement planning confidentially.

P - Project the income needed to maintain a comfortable standard of retirement living.

A - Adjust the retirement income needed for inflation.

I - Identify likely sources of income in retirement.

D - Decide on current investment which will create sources of future retirement income.