Financial Planning for your retirement years

Good financial planning for your retirement years is imperative. As time goes on, one needs to become aware of your future needs and to put good strategies in place to prepare for your later years. I can sight two different examples of financial planning. One in which the man put plans into place taking in the smallest of details. He eventually found himself in the position of drawing a larger income in his retirement than he did when he was a salaried worker. The second example is of a man that did not plan ahead and had to move in to his daughter’s house as he could not make it on his own.

The value of planning for his financial future

For the sake of the example, we will call the first man Fred. I became aware of what was important to him very soon after we met. He always made mention of the plans he was putting in place and stressed often to me the importance of this financial planning. As a younger working man he had purchased a number of bonds and had an existing IRA as well as a 401K. The way he lived his life and managed his lifestyle was always within his means. He admits to occasionally splashing out on an expensive family holiday or on a new vehicle. He and his wife have traveled extensively and enjoy the recreational sports that they like, yet still live within reason. 

What stands out for me is that he never lost sight of the value of planning for his financial future. One can really admire all the hard work and sacrifice that he put in early on in his life as you see how comfortably and care free he lives now. Fred’s father is the one who had always expressed to him this viewpoint and Fred admits now that he is glad that he took his advice. He set up a goal that would see his investments bringing in one and a third of the value of what he was bringing in while working. Another tip from his lifestyle choices is that all his assets were owned by him. He had lived within his means and had paid off his house and other assets. He pays only property tax.

The danger of not planning for retirement

The other man in our example is Al. Al man reveals the other side of the picture. Although he had worked hard his whole life he had done very little planning and had saved very little. His idea of planning had never entailed more than what his pension would give him from work. But he had never really stayed in one job for more than a few years at a time. Al had no concept of the value of financial planning for his later years and had never given any time to finding out the ins and outs of rolling over his retirement funds.

On reaching retirement and realizing that his funds would not cover his expenses he had to move in with his daughter and son-in-law. He has his own bedroom and has to contribute to a portion of the rent and utilities to play his part. It is difficult to make it through each month and it is really a pity he did not have the background or financial wisdom that Fred had when he was younger in order to prepare for this time in his life.