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Pension, Retirement and Investment Goes Well Together
Pension, retirement and investment are three words that go well together for a good reason. It is not enough that you just save up as much as you can. If you want a comfortable retirement, you need to plan for it carefully and part of that planning would be your investment and pension.
Investment and Asset Management
Until now, chances are your strategy was focused on monetary accumulation. But if you are already retiring, you have to rethink about asset management.
You might be withdrawing cash from your accounts for retirement instead of accumulating so you might want to reallocate some assets you have into investments meant to meet all of your short-term needs. However, you might still have very long term needs for 20 years or so. If this is the case, an approach for long term investment remains necessary.
It is common for retirees to be averse to risks. With the absence of a steady working income, they worry about the unexpected dwindling of their nest egg and their first reaction is to seek investments with very low risks.
Before changing your portfolio mix, don’t forget that your retirement goal is to be financially independent for the rest of your life. It means that you have to consider the impact of inflation, the market and longevity on your portfolio.
Importance of Pension
Everyone looks forward to that time when they can finally retire. The state pension is enough for some people to offer a basic income level. Others might have the chance to acquire wealth without pension schemes, such as through business ventures and assets.
However, many people still wish to supplement the investment and existing nest egg they have with a pension scheme of one form or another. Most employers also understand that even if their employees are still working, it is important for them to build up a pension entitlement once they retire.
There are several benefits associated to pension arrangements and these include the following:
Pension schemes can offer protection in lump sum form and pensions to the dependents in case the member passes away.
When a person retires, their income will be reduced and a pension can somewhat make up for this income loss during retirement.
To promote pension schemes, there is a tax relief available for contributions allotted for pension schemes as well as the growth in such investments.
Decide on Your Retirement Lifestyle
If your goal is to stick to your lifestyle at the moment, the general rule of thumb is that it could be 80% of your present expenses. Such estimate that may differ based on individual circumstances is according to the assumption that you will have a lower cost of living since work-related expenses will be eliminated such as restaurant lunches, dry cleaning and commuting costs.
However, most financial experts suggest that you plan maintaining 100% of your existing costs or even more. There are retirees that even need more money due to their travel plans and other forms of expensive recreational activities. You also need to factor in the increasing healthcare costs.
At the end of the day, if you want your retirement to be as comfortable as possible, pension and investment are two things that you should be paying attention to as early as now.
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