Planning For Retirement
Planning for retirement can be a daunting task. First of all, just understanding all the financial jargon is tough when finance isn't an area in which most people are versed. Understanding all the financial tools out there and the benefits of each can take a long time. There are so many life factors that impinge upon the calculations that one must surely have a good understanding of the tax laws and regulations which affect savings, as well as the future value of money and how much money will be needed when that golden age has been achieved. While all of these issues are not insurmountable most individuals will want to carefully seek out the advice of a reputable financial advisor to lead the way through the paperwork and initiate meaningful discussion and solutions with clients.
Tools used in planning for retirement are many. However, a few worthy of mention are plans sponsored by employers such as 401(k) plans, 403(b) plans and pension programs. Most employees want to be able to take home as much of the paycheck as possible, and so may balk at participation in these programs. If this is the case, these individuals are hurting themselves in the long run, because most companies will provide a match on the contributions employees make into the plan, whether the match is $.50 on the dollar or dollar for dollar. This is free money! In most cases, an employee's contributions will be fully vested in six years which means all those employer contributions become the property of the employee, which helps the money grow that much faster. Of course, the advisor will need to assist the client in choosing appropriate investments that will provide a good return on the investment, plus provide a measure of stability for the portfolio. The advisor will also explain how the stock market works to alleviate fears when there are ups and downs on Wall Street.
There are money calculators to assist people in planning for retirement, which are available on websites sponsored by the plan providers that are wonderful. The person inputs all the information regarding the amount of money being saved each year, the amount of interest gained, the return on any current investments, expectations for other types of income from perhaps social security, plus all other types of investments owned. Then, the individual decides what year to retire and inputs that, and estimates how many years of non-work will occur until death. All of these factors will be computed to come out with a pretty good estimate of how much money will need to be set aside in funds and plans to meet the final goal. Adjustments can be made as well in the percent contribution currently being made by the employee so that either larger or smaller savings can be realized in the end, depending on the needs of the individual.
The employer plan advisors and financial advisors are not the only resources to turn to for advice when planning for retirement. There are companies and non-profit organizations existing that cater to the needs of those nearing retirement age that can provide a plethora of information on the subject. These organizations can also be helpful in deciding ancillary issues such as insurance after retirement, health care and long term disability needs. Items such as these cost money and therefore are important considerations in the entire savings process. Therefore, it is very important to approach planning for retirement from a comprehensive or holistic point of view, considering every part of the financial picture. "For I know the thoughts that I think toward you, saith the Lord, thoughts of peace, and not of evil, to give you an expected end" (Jeremiah 29:11, KJV).
There are tools available for saving called IRAs or Individual Retirement Accounts, and may be called by various names but these vehicles can provide valuable tax-savings for the saver when planning for retirement. There are limits to how much can be set back in these types of accounts, and also there are regulations that dictate how the money can be used and for what purposes. However, should the potential retiree decide that money is needed in short order, or if there is an opportunity to start a new business venture, then IRAs can help greatly to fund these types of projects without much, if any, penalty involved. Many banks offer IRAs in various configurations so be sure to speak to a financial professional at these institutions as well.
Individuals should be aware, when planning for retirement, that simply stashing savings in a bank account earning less than 2% interest will not provide for retirement savings goals, because the rate of earnings will never be sufficient. This rate of interest earnings is usually gobbled up by bank fees for one reason or another. Therefore, all savers would do well to seek out the best return on the investment possible. In the stock market, analyzing companies that get returns greater than 10% would be great picks for portfolios. There are books available that instruct in a step-by-step fashion how to go about planning for retirement via utilization of financial analysis of corporate annual reports to discover if these companies are viable as investment vehicles. The time spent doing this is well worth the while and can yield many thousands of dollars for those people taking the time to also understand the exchanges and markets. The planning process can actually become exciting and fun!
Younger workers should not wait to start planning. The sooner the savings vehicles are started, the more money can be realized when the time comes to stop working for good. Time goes very quickly, and only more so as one ages. Do not depend on social security to be the only income, because that alone will never be sufficient. Be self-sufficient and take control of the future.
Wealth Management CompaniesThe job of wealth management companies is to advise an individual or company as to how to invest money in order to get the best return for the investment. This financial institution will suggest the best places to invest and will also implement investment decisions by distributing assets and properties in the way that has been directed. The goal of these efforts is to both secure and increase the wealth of the customer. Because management companies deal with matters which are important to the customer, it is crucial that the manager who is chosen is someone who can be trusted. A good working relationship with such a manager and the freedom to be able to discuss goals and priorities in full confidence is important as well.
Managing substantial wealth can require a great deal of time and oversight. Wealth management companies can free an individual or a company from needing to devote such extensive time or resources to keeping accounts in order. Also, these companies may have resources which are not generally available to individual investors, such as the access to certain investment options or the use of certain banking tools. Perhaps more importantly, management companies bring years of experience in dealing with these matters, and an accurate sense of the appropriate avenues to take to achieve the expected goals. Like experienced drivers racing around a crowded city, management companies know the best routes to arrive at one's desired destination. There are many investment options available in today's markets. Choosing a financial instrument can be difficult. There are savings and investing options to consider, as well as insurance needs to cover. Stocks and trading, derivatives and trusts -- all these areas and many more must register on the radar screen of competent wealth management companies.
A first step would entail analyzing the customer's financial situation. A full discussion of wealth-related areas will help wealth management companies determine the customer's goals and the risk profile which will best meet the needs of the situation. An elderly couple will have a vastly different risk profile than a young person with no family obligations. An established company will have more complex needs (and possibly more investment options) than a successful, yet unproven start-up company. There are also differences between the way wealth management companies approach an individual or corporate account. In addition to the considerations mentioned above, a corporation may require help with designing pension solutions and other employee benefits. Protection of company assets and provision of services even as far-reaching as employee counseling may be other areas which a company may wish to assign to a management company. Obtaining the best tax solutions for a company's needs may in itself be a fine reason to employ these companies as a partner in a business endeavor.
Individuals also may find wealth management companies helpful. Choosing savings and investment tools and providing financial counseling for retirement needs are some obvious areas where the services of such a firm may be beneficial. Tax services are often welcome, and business concerns and estate planning can be covered. The person's lifestyle and income requirements will be another consideration in arriving at an overall financial plan. Inheritance issues and charitable giving can be designed to distribute money and property according to a client's wishes. Even after a plan is designed, the company will assist in its activation and periodically check to be sure that it is being implemented. Special consideration may also be given to families who have financial concerns regarding the transfer of their wealth to succeeding generations. These families may have need of advice in many areas of financial management. Lifestyle needs, business and philanthropic concerns and family issues need to be clearly addressed in these cases. Customized trusts and banking arrangements can be designed for a family's convenience and financial security. Financial planning works best if all these areas are well coordinated.
Some Christians may be uneasy with the thought of utilizing wealth management companies and devoting such effort to securing or increasing personal or company wealth. It is true that making these issues the focal point of one's life would indicate that priorities are seriously out of order. In that case, wealth would be taking the place of God in a person's life. However, in the parable of the talents in the New Testament gospel of Matthew, several servants were entrusted with a portion of their master's money to invest while he was away. The servant who used the money wisely and gained a profit for his master was commended: "And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more. His lord said unto him, Well done, thou good and faithful servant: Thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord." (Matthew 25:20-21) Motives can be a difficult issue, but the main point to keep in mind is that this servant was not accumulating money for his personal use, but for the purposes of his master. Perhaps this guideline can help Christians manage and use their wealth wisely for godly purposes. Wealth management companies can assist in these endeavors by locating financial instruments which may bring the best return on these investments. Remember that although these companies can be of great benefit to an individual or company, the final decisions about the allocation of these resources remain in the investor's hands, and he or she will need to remain vigilant that the intended purposes for these funds are being accomplished.