When you are planning for retirement you need to take into account many factors which will determine the level of comfort you will enjoy in your retirement. Retirement planning should start as early as possible in your life and in you planning for retirement you should have a balanced portfolio of investments that include, property, cash, equities and annuities.
A general rule of thumb is to use 10% of your monthly gross income towards planning for retirement which percentage will vary according to when you started your retirement planning.
First consider what legacy you wish to leave leave behind. Perhaps you wish to leave a certain amount of money upon your death to your children and grand children, factor this into your retirement planning and consider taking out a funeral plan to ensure that your children are not left having to finance the cost of your funeral while waiting for any beneficiary payments from your estate. Funeral plans are very inexpensive policies that pay out a lump sum immediately upon your death as well as catering for other expenses associated with a funeral.
Now that you have taken care of that aspect of your retirement planning, consider your current gross income which must include any bonuses or benefits like a car allowance, petrol allowance or performance bonuses. Calculate your real gross income and base your income requirement for your retirement planning exercise on your real gross income. If your retirement planning is geared at providing about 80% of your real gross income at the time of your retirement, you will be able to live a comfortable life in the lifestyle you are accustomed to.
Your company pension fund and any annuities or preservation funds that you have accumulated during your working life from having changed jobs need the tax implications assessed before your retirement to ensure you do not get any unwanted surprises when you do retire. This may leave you with retirement savings gap that you had not considered in your retirement planning. It is always recommended that you make use of a professional retirement planner when planning your retirement to advise on issues like tax efficient investments.
