Benefits of Retirement Planning — PillarWM
Are you sure you have enough money saved for your retirement? Perhaps you’re not aware that you may need up to 80% of your current annual income in order to retire comfortably, according to AARP (American Association of Retired Persons),or,perhaps,that retirement can last 30 years or more. In any case, retirement planning is a sensible approach to securing your financial future. If you currently own more than $10 million in liquid assets, this becomes even more important. You may want to check out our guide, titled 7 Secrets to High Net Worth Investment Management, Estate, Tax, and Financial Planning, that is targeted toward high net worth individuals with over $10 million in assets.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
For more comprehensive assistance, consider hiring a PillarWM retirement planner. Pillar Wealth Management specializes in wealth management services to investors with $5 million to $500 million in liquid assets.
In this guide, we’ll walk you through the benefits of retirement planning, but first, let’s look at what retirement planning is exactly.
What Is Retirement Planning?
Retirement planning is the process of defining your retirement income goals and making the decisions to achieve them. It often involves implementing a savings program, managing financial assets and the associated risks, identifying sources of income, sizing up expenses, and more.
To gauge whether your retirement income goals will be achieved, you’ll also need to predict future cash flows. Also, each country has its own system of workplace-sponsored retirement plans, so you’ll need to take these into account when planning for retirement. In fact, if you’re located in the US, we recommend checking out the system in your state, which might differ from rules in other states. For deeper insights into how experts view retirement planning in the US, schedule a video consultation session with our wealth managers.
Benefits of Retirement Planning
Possess a Unified Vision for Retirement
It’s quite possible that your idea of what retirement looks like is very different from that of your partner or spouse, with whom it’s pretty common to have differing opinions about retirement.
You may envision a luxury condo on a Florida golf course, which doesn’t require maintenance. In contrast, your spouse may view retirement as a grandchildren-friendly home with a playground and yard, strategically situated between your children’s homes.
Planning ahead for retirement allows you to tackle those uncomfortable conversations about your post-retirement lifestyle early on. Plus, an outsider who is not affected by the emotions of your relationship may be beneficial for you and your partner to have in order to reach an agreement.
It’s a lot easier to reach an agreement when you’re not yet a “senior.” With a consensus, you and your partner should find it easy to work together to achieve your combined goals, making it super-easy.
You Start Making Goal-Oriented Decisions
Many financial decisions we make have a long-term impact on our lives. Plus, as your life becomes more complex, you’ll engage in more frequent decision-making, which may not be easy.
For instance, you might find yourself stuck about deciding whether it’s rational to switch jobs at specific points in time, when to start receiving Social Security, what steps to take to maximize employer benefits, what you should do to reduce your tax burden, and whether or not it’s worthwhile to buy a retirement home.
Every pebble that’s added to your financial pond only increases the ripples in it. Your anxiety about your financial future will only increase when you have too many complex decisions to make.
Retirement planning makes your retirement goals clear. You discover where you are in relation to where you want to be. This helps you make wise, goal-oriented decisions so that you move in the right direction. Your decisions will have even greater impact if you’re an ultra-high net worth individual. If that sounds like you, seek inspiration from our hardcover book titled The Art of Protecting Ultra-High Net Worth Portfolios and Estates: Strategies for Families worth $25 Million to $500 Million.
Retire When You Want to
Most of us would love to retire before reaching the age of 65, but very few actually feel that they’re financially prepared to stop working. Some of the most common obstacles to retiring on your own terms include low levels of savings, ever-increasing healthcare costs, delayed Social Security eligibility, stock market corrections and declines, and so on.
The aforementioned reasons force many people to delay their retirement and keep working for much longer than they would like.
Retirement planning makes you financially prepared. Knowing this programs your mind to believe that you’re ready to leave your job whenever you like.
Also, retirement doesn’t necessarily mean that you’ll have to stop working altogether. Many people choose to take on charitable unpaid or part-time work during their retirement years. Others are so passionate about what they do that they’ll stick to it as their own choice.
For example, someone who has built a business from scratch and views it as their baby may want to keep working for a few years beyond age 65. To learn more about how you can retire on your own terms, schedule a video meeting with our highly experienced wealth managers.
Covering Your Long-Term Healthcare Costs
According to the Administration for Community Living, there’s a70% chance that someone turning 65 will need long-term care and support services in their remaining years. Plus, 20% of 65-year-olds need long-term care support for longer than five years. That’s a long enough time to lead to hefty healthcare costs, even for high net worth individuals.
Early retirement planning positions you to save now for healthcare costs and other things you know you’ll need or want in the future.
It’s no wonder that the demand for long-term care insurance is surging dramatically. Like in the case of life insurance, the earlier you buy the policy, the lower will be the long-term care premiums. They’ll increase by a smaller amount each year. For instance, premiums increase at an average rate of 2%–4% a year if you purchase a policy in your 50s. In contrast, if you buy a long-term care insurance policy in your 60s, the average increase is 6%–8%.
Besides, experts say that home equity acts as an incredible resource for the tailend of retirement. Keep in mind that living in a continuing retirement community can be outrageously expensive. Your home equity is a great way to fund your healthcare needs in the future.
If a retirement home is part of your unified retirement vision, consider buying at today’s prices. This way, when you’re ready to retire, you’ll have built-in equity at your disposal.
Hence, having long-term healthcare cost coverage is among the biggest benefits of planning early for retirement. How your investment portfolio performs now can significantly impact the availability of healthcare funds when you retire. Use our Performance Guide to ensure consistently high portfolio performance.
Understand How Financial Goals Are Related
People tend to view and evaluate their financial objectives in isolation, not realizing that one objective can diminish the chances of accomplishing another objective or affect it in ways that can’t immediately be noticed.
For example, you may have an investment decision in mind but fail to acknowledge that its tax consequences can be adverse. Similarly, it might be tough to spot how your contribution to retirement savings is affected by a decision to purchase extra insurance. Also, it’s critical to know how all these factors will impact your heirs.
Retirement planning shows you how your various financial goals relate to and affect each other. It lets you view your financial decisions as competing interests that may or may not depend on one another, instead of thinking of them as a collection of yes/no decisions that are completely unrelated.
Once you understand that there are trade-offs between different financial goals, you should be able to set your priorities better and plan accordingly. For deeper insights into how your financial goals are related, schedule a video consultation meeting with our wealth managers at your convenience.
Peace of Mind
If you think about it, everything we want and aspire to is directed toward the ultimate goal of having peace of mind at all times. The same holds true for financial and retirement planning.
For instance, you know that you’ll be in trouble if you face a medical emergency but don’t possess enough funds to cover your healthcare bills. On the other hand, when you plan for long-term healthcare for your retirement years (via insurance or other ways), you’ll have peace of mind from knowing that your healthcare costs will be covered. As part of your retirement planning tactics, for instance, you may choose to grow your investment portfolio. To make that happen, you can use our free book titled 5 Critical Shifts For Maximizing Portfolio Growth Strategies – For Families Worth $5 Million To $500 Million.
A lack of planning often leaves a cloud of uncertainty around how you will live after retirement. Retirement planning eliminates this unnecessary stress not only during retirement but also in the pre-retirement years.
This might come as a surprise to you, but yes, retirement planning provides opportunities to reduce your expenses, while also increasing the chances of meeting your goals.
For instance, property prices tend to rise over time. This fact may prompt you to explore your options now in the location you have in mind rather than at a time when you retire. You may even decide to acquire a smaller home and rent it out until retirement. If you do take this route, be sure to determine how much time you have to raise the funds and build your dream retirement home. These steps can make your goal more achievable, too.
Similarly, engaging in retirement planning now can also help you save on insurance costs. Most insurance policies you might need, such as for long-term care insurance, can be acquired at a much lower premium when you’re young and in good health than during retirement, when you may need to pay higher rates or even face denial of coverage.
Thus, with early retirement planning, chances are your goals will be met and at minimal costs.
By now, your question, “What are the main benefits of retirement planning?”, should have been answered.
The average Social Security benefit (as per January 2021) is $1,543 per month, with the maximum possible payout being $3,148. This certainly isn’t enough to cover your post-retirement monthly expenses, so it’s high time you started planning for retirement.
Keep in mind that the way you manage your wealth strongly impacts your retirement plans. Wealth management is best done with the counseling of financial experts. Use our guide titled Ultimate Guide to Choosing the Best Financial Advisor for Families worth $5 Million to $500 Million to choose an advisor.
If you’re a high net worth individual, get in touch with Pillar Wealth Management, a reputable wealth management company that specializes in serving investors holding between $5 million and $500 million in liquid assets. Our PillarWM retirement planners will provide you with solid investment advice and suggest top investment strategies directed toward a happy retirement life. To get started and make the most of our wealth managers, schedule a video consultation meeting with them at your earliest convenience.
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