- Start early using selected professionals to advise buying the right products
- Understand financial planning & how a pension plays an important part of it
- Build a financial plan with discipline & order to insure strength of plan from start
- Have a plan for without one failure looms
Retirement or Pension plans are part of one overall financial planning. Many things in life having our personal efforts made without a plan of action in place tend to fail for various reasons. Statistics will show that those who set up a plan of action usually reach their objectives and in many cases exceed them. It is critical for one to plan for retirement and provide necessary funding for the expected pension benefits wanted. Pension plans need time to work. More time means better results. Start early and stick to it.
Let's first answer the question of what is "Financial Planning"? About 30 years a company came out with a very simple way of explaining financial planning and to this day I share it with others. A family's financial plan is created like building a house. One begins by purchasing a foundation of Life insurance for the house to rest securely upon. An untimely death of the family's breadwinner can affect significantly all aspects of the total financial plan (the house) in its early development stages. Once the foundation is securely in place build walls of ready cash to cover day-to-day family needs without affecting other plan parts. This is in the form of savings, interest-bearing checking, short-term time deposits, money market funds, low volatility income mutual fund shares and charge card lines of credit. Over the house walls is placed a roof of investments of varying risks. These funds are excess monies not required by the walls of ready cash needs. They could be in form of investments into business, real estate, stocks, bonds, collectibles and a long-term retirement or pension. Surround the house by buying a circle of ample family Healthcare protection. This protects the house against a member's unforeseen illness or accident affecting financially other parts of the financial plan. With provision of all of described financial plan parts this should assure the family of reasonable security into the future. However, plans must be reviewed at least annually because of changing family situations and demands of the financial plan itself. Expect periodic adjustments as necessary over time. Both husband and wife should participate in the creation and monitoring of the plan. Let us not forget the importance of disaster planning to include a Will and a plan of continuity in event of a major family crisis.
Retirement or Pension planning should be done with the help of Financial Planning Experts. These experts should understand aspects of balance and safety as we discussed with the building of the house. Unfortunately many of the better ones are very busy already and do not lack clients. Chat around with others who have had plans in place for some time who feel comfortable referring you to their advisor. Take your time. Make sure you view a potential advisor as a professional you would like to work with and who appears to have your best interests in mind. You can never be sure so don't put all your eggs in one basket. The most important advice is to start building a plan now (period) for without a plan failure looms.