Life expectancy around the world has undergone a dramatic increase throughout the history of humankind. We can largely accredit this to advancements in medical science and health care. Subsequently, the increased quality of life has correlated to an increased average lifespan.
In the last century alone the lifespan of the average American has grown so, that current and succeeding generations will require a longer financial planning period for retirement.
More money is needed for housing, food, taxes, health care, and other living expenses.
This is where strong financial planning skills come into play.
According to the 25th Annual Retirement Confidence Survey published by the Employee Benefit Research Institute (EBRI), 15% of workers are not at all confident about being able to afford basic living expenses after retirement.
While that number may seem relatively small, think about the policies currently in place? 15% is far too great a number in what is already a growing trend.
This type of uncertainty can have more than psychological effect on your health, but physical as well. There already exist enough stressors to impede your level of health without you making yourself sick.
That is why it’s imperative that you build a financial portfolio with a substantial amount of money saved away to continue living a financially stable retired life.
Financial planning can be a daunting task considering the sheer number of aspects involved.
Here are a few tips that will aid you in gaining control of your financial security.
1.Begin Saving Early
If you’re already close to your retirement years and think that it is too late to initiate a savings strategy, we implore you consider otherwise.
It’s never too late to start saving.
To initiate a habit of saving regularly, it is imperative that you develop a detailed list of your current assets, liabilities, and income.
2. Construct A Budget
If you can’t get a grip on your everyday spending then budgeting is not only important, but vital for your financial security.
Learning to balance your current expenditures will allow you to build a base in financial planning. In the future, greater financial goals will be attainable as you understand the economic forecast of your future.
That being said, make sure that your budget reflects your values and priorities.
So, create and stick to a budget that will allow you greater economic stability.
3. Plan For The Unseen
When planning for retirement, several people tend to forget the unexpected expenses that come along. Taxation, in-home assistance, and illness can prove detrimental to your financial freedom.
Therefore, when you calculate your expenses, create a separate financial “insurance policy” for yourself. This money will be a godsend for unforeseen events during your retirement years.
So, make realistic projections and plan accordingly.
Consider using tools such as Mint, Yodlee MoneyCenter, and Personal Capital to keep a track of every nickel and dime that you spend.
4. Proper Asset Allocation Plays a Big Role
Are you familiar with the old adage – Don’t put all your eggs in one basket?
This holds true for your retirement assets. In order to manage them effectively, avoid putting all your savings in one form of investment as that may result in you losing them all at once in case of a market crash; stock market movements like these will negatively affect your investment.
Moreover, diversifying your asset may also limit what you yield or your, return on the investment.
5. Choose a Professional Financial Planner
If you think financial planning and portfolio management would be difficult and complex for you. For this reason, you should consider working with a professional, experienced, and reputed financial planner.
Having a financial advisor by your side can help guide you towards an economic boon.
An adept and well versed financial planner can help you navigate the seemingly complicated financial landscape and stay on top of things.
Saving for the future can be difficult, especially if frugality is not one of your character traits. Some of the best-laid retirement plans can go down the drain if not executed properly or in a timely manner.
The earlier you learn to get a grip over your finances, the larger your savings will be. Through careful planning you can help mitigate potential post-retirement financial risks.
Practicing the aforementioned tips will put you in a better position to take control of your financial security. By planning for unanticipated circumstances, you will be able to live a financially comfortable retired life.