Investment and Retirement Planning

Custom Student Mr. Teacher ENG 1001-04 9 November 2016

Investment and Retirement Planning


• Retirement is the point where a person is not in any kind of employment /business/occupation. • This usually happens upon reaching a determined age, when physical conditions do not allow the person to work any more. • Retirement could also be due to personal choice-either due to adequate pension or personal savings or due to a regular unearned income like interest, rents etc.

• The retirement age varies from country to country but it is generally between 55 and 70. • Certain jobs, which are of dangerous nature or of fatiguing nature, may have an earlier retirement age.

Support and Funds
• Retired persons support themselves either through superannuation, pensions, savings or through family (earning children), as in Indian families. • In some other countries the government provides the pension benefit to all its citizens.

Retirement Planning

• Retirement financial planning refers to a collection of systems, methods and processes which support a family unit’s (client’s) desire to achieve a state of financial independence. • It is a process of determining the financial goals at the point of retirement. • It requires constant monitoring of the progress of the plan and then taking adequate remedial measures

Need For Retirement Planning

• Increasing Life Span • Low Returns In Conventional Modes Of Savings. • Unintended Contingencies. • Increasing Medical Cost. • Diminishing Trend Of Joint Family System • Inflationary Trends • Absence Of Social Security Benefits By The State • Pursuing Hobbies • Falling Interest Rates

Steps In Retirement Planning

• Decision retirement about the retirement age option. • Setting of financial goals • Saving of relevant amounts w.r.t. goals • Investing in appropriate modes • Calculation of net worth • Regular monitoring of financial plan and incorporate the necessary amendments in the plan.

Factors Affecting Retirement Planning

• Life style • Personal values • Nature of income- salaried, business or professional; stable job/non-stable job; private job/government job • Number of years left for taking retirement • Inflation rate • Present net worth of a person • Risk appetite of a person • Services of a certified financial planner • Conviction in the retirement planning effort • Seriousness & perseverance for retirement planning

Life Expectancy & Career Stability


• Life expectancy is the major ruler of retirement planning. • As per the Indian context, still the importance of retirement planning is not clearly identified. • With the increasing life expectancy, high standards of living and high expectations for the upcoming future, pressure is building up for fund allocation, to meet up the needs of retirement. • Longevity of life expectancy has to be kept in mind while making out a retirement plan.

• Key factors to be evaluated while making out a retirement plan are present life style, income and capacity to save, family circumstances, level of inflation prevailing in the economy & the standard one would like to maintain at the time of post retirement


• 90% per cent of India’s total working population is not covered for postretirement life. • The main objective of retirement planning is to create a well funded and safe future for the client. • Financial needs of the client needs to be clubbed between his/her current income and post retirement expenditure.

• To maintain up current life style one has to plan to save almost 65 to 85% of current income.

Life Cycle

• Every phase of life cycle has a different level of income, expenditure and saving. • The first phase of life cycle is the childhood where an individual has no earnings but certain amount of money is spent on him/her (school fees, clothing, food etc). • Second stage comes where the individual may or may not start his real earnings or a stable career.

• In the third stage an individual enters a stable career and has good amount of earnings to save and start planning for his/her retirement • Fourth & fifth stage is time period to save maximum and allocate maximum funds for the retirement planning. • In the sixth stage comes the old age. At this stage the savings tend to reduce because of medical expenses, new expenses related to old age etc. • The last two stages of the life cycle is the retirement period where the saving are utilized to cover the real retirement years or retirement costs.

Career Stability

• Career stability is one of the most important factor which clearly needs to be evaluated to develop a retirement plan. • Fund allocation for retirement is done with the help of surplus earnings of an individual during his/her pre-retirement period. • Stable career and in return stable earnings provides a scope for having well planned and organized retirement plan

• Employers also have a important role in retirement planning as they contribute in pension plans other contribution plans etc. • Career stability helps to draw clear anticipation of future earnings can be which helps in retirement planning

Major Factors Affecting Career Stability

• Job Satisfaction: Job satisfaction covers the factors like the level of pay and benefits, the perceived fairness of the promotion system within a company, the quality of the working conditions, leadership and social relationships, and the job itself. • Alternative opportunities: If the market is opening up for new jobs and careers and individual can provide his works onto those opportunities the career stability can embark for changes.

• Employer-Employee Relationship: This issue covers the factors like loyalty of an individual towards the employer, future protection provided by the employer, motivation, leadership, timely appraisals. • Changing economic conditions: The economic conditions of a country like recession cycles, developing sectors, problems related to any particular sector private and public ownership etc also affects the career stability. • There are also various policies and economic strategies of government related to employment & foreign investments etc which have a direct affect on employment scenario.



• It is an planning. interactive part of retirement

• In pre-retirement counseling all the basics of the retirement plan are drafted as per the needs and expectations of the client and as per the client’s present and anticipated financial conditions. • Financial planner has to clearly evaluate the needs, attitude & lifestyle of the client to have a strong and trustworthy relationship with the client.

Steps For Retirement Plan

• Inauguration Of Retirement Plan: Inauguration of retirement plan would depend on life expectancy. If the client starts accumulating funds for his/her retirement early, with small savings & less burden he will be able to achieve the goal. • Desired Retirement Status: This would involve budgeting, income sources and proper asset management etc. Estimated expenditure and sources of income during the retirement years to the client have to be evaluated properly.

• Retirement Expenses & Sources Of Income: Clear identification of all the costs & incomes has to be made. Provisions for allocating 65 to 70% of current income for the retirement period should be drawn.

Insurance With Retirement Planning

• Insurance plans with a cash back or whole life insurance are suitable because they provide insurance as long as the premiums are paid and also accumulates savings, thus it has a cash value. • It also helps to pay off uncovered medical costs, funeral expenses & also acts as an income replacement for survivors.

• With increasing life expectancy, and other challenges a life insurance can provide a life-long, worry-free retirement and insurance protection. • Major expenses of the retirement years are the health care costs, health insurance can act as a helping hand in that case to meet up these costs.


Estate Planning With Retirement Planning

• Estate planning is the process of accumulating and disposing of an estate to maximize the returns of the estate owner. • Various tools of estate planning are used like Wills, Trusts, Gifts, Contributions & proper evaluation of Estate taxes.

• Estate planning should maintain out the costs of the property and should develop an estate plan to give proper and safe income generation. • Estate plan will cover all the legal formalities and all the documentation regarding future transactions.

Tax Planning With Retirement Planning

• Savings and investments are interconnected. • Proper management of savings and investment results to tax benefits and these become very important at the time of retirement. • Retirement planner must clearly evaluate the aspects of its liquidity, security, and the most important one the return and tax income over such investments.

• Proper tax planning can itself prove out to be a saving tool because with effective tax planning is basic foundation for effective retirement planning.


  • Subject:

  • University/College: University of California

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 9 November 2016

  • Words:

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