I once sat through a workshop sponsored by a company I used to work for where the guy in charge kept warning: “There are no do-overs when it comes to retirement planning.”
He also added (in a very ominous tone) that if we messed up now we’d all be doomed to a life of penny-pinching in our golden years.
Ah, memories of corporate America.
Truth be told, the workshop leader’s scare tactics were quite effective. His advice was sound and bears considering regardless of whether you are self-employed or part of a multi-million dollar corporation.
Retirement planning is important, as the outcome can decide whether or not you will be financially able to quit working when you hit your golden years. If you don’t get on the ball now, retiring may not be an option down the road. Ideally, you want to obtain financial freedom once you hit retirement age; however, in this day of economic instability it’s getting increasingly difficult to maintain sound financial footing.
One of the ways to determine if you are getting the most bang from your retirement plan is to test it out for a few months. Review your budget at the end of a set time period. If it works well for your current situation, stick with it. However, know that down the road you will have to make modifications. For example, you need to factor in inflation. While inflation might not seem like a big deal now, it can really mess up your retirement budget as prices increase over time.
Also, don’t forget to factor in life expectancy. These days people are living longer and if you don’t pad your plan you could run out of money too soon. Financial experts suggest adding five to 10 years to your average life expectancy when planning for retirement.