Mandeville Weekly News

KEY QUESTIONS FOR RETIREMENT PLANNING CONTRIBUTED BY SCOTIA INVESTMENTS

Posted by SR (riley) on Nov 03 2016 at 2:13 AM
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Planning for a financial event that will take place many years in the future, such as your retirement, can be a challenging task. There are many personal and economic variables which can affect your retirement plan, so it is critical for you to seek expert guidance.

While you can receive assistance from investment advisors who are knowledgeable about the retirement planning process, it’s important for you to understand the issues to discuss with them. Here are some of the key questions that you should ask about your retirement:

How much retirement income will I need? Before you can calculate your future retirement income needs, you must know your current expenses. If you were retired today, think about the costs you would incur and include additional amounts for medical bills. Preparing a detailed budget will ensure that you cover all costs.

How will inflation affect my income needs? Inflation, the rising cost of goods and services, will increase the amount of money required to pay your bills when you are retired. Your investment advisor will use an inflation assumption to adjust your future need, so that you can plan adequately for your retirement income.

How much will I need to save? The lump sum that you should aim to amass in order to generate sufficient income in the future will depend on the age that you wish to retire and your life expectancy age. The advisor will work out a nest egg target amount that should satisfy your needs during your retirement years.

What are my investment options? Your risk comfort level with different investments must be considered before your advisor can recommend an investment plan to meet your needs. Your advisor will also make an assumption about the average return that you could expect to earn on your retirement contributions.

What factors could affect my plans? There are several macro economic variables such as changes in interest rates, exchange rate fluctuations, stock market performance and government policies which could affect your plans. Your advisor should indicate best and worst case scenarios to give you a realistic picture.

How will I know if my plans are on target?  Keep track of your investments so that you can see how well your periodic contributions are performing over time. It is advisable that you set an appointment to review your plan at least once per year, or whenever a major lifestyle or economic change has occurred.

What if my nest egg won’t be enough? Despite your best efforts, sometimes it may be difficult to save enough to reach your nest egg target. Next week we will look at ways to boost your retirement investment plan to ensure that you will be able to fully enjoy your retirement lifestyle.

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