Introduction: What is retirement planning?

When you are young, it may be challenging to think about retirement planning. Young people are busy starting careers, families, or settling in new locations, so it is understandable that they have the reluctance to discuss retirement planning this early in life. However, life goes by so fast. Every year you waste postponing retirement planning means adding a year depriving yourself of retiring early and enjoying the golden years. Thus, this module helps you--as a young individual--to start this conversation about your future. 

 

One of your goals in life should be retiring with financial freedom and security through a financially comfortable and stress-free lifestyle. Retirement planning is the crucial task for this goal, as it decides how you will live once you are old and no longer wish or are unable to work. It involves the consideration of a number of factors:

    • What age do you hope to retire?
    • How much money will you need to cover the living expenses and your other plans after retirement?
    • Where will your money come from?

Generally speaking, retirement planning is planning your finances for the period of life after you stop working. One standard plan cannot fit everyone because each person has his/her own unique situations.

Your behavior toward retirement planning is intrinsically influenced by your attitude, knowledge, and information. Attitudes include how you take responsibility and tolerate risks financially. If you tend to take financial responsibilities for your future, you may be more likely to engage in retirement planning. Young people, though, are often inclined to be present-oriented, rather than future-oriented, with uncertain knowledge and information needed for retirement. For the full investment in retirement planning, you as a young individual, need to acquire knowledge of financial literacy and numeracy. 

Here is a list of information needed for retirement planning:

  1. Available investment options
  2. Lifetime path of annual earnings and retirement income
  3. Rates of return on investments and compound interest
  4. Risk and return of various assets
  5. Age and length of service to retire
  6. Present and future individual income tax rates 

Now that you know what retirement planning consists of, think of paying it forward and discuss your plans for retirement with a friend or a family member.

arrow.png  Chapter 1. What are the most common retirement plans?

arrow.png  Chapter 2. What is the difference between traditional IRA and ROTH IRA?

arrow.png  Chapter 3. How to write your own retirement planning guide?

arrow.png  Chapter 4. How to avoid common and costly mistakes in retirement planning?

arrow.png  Chapter 5. How to forecast a retirement budget?

arrow.png  Test your knowledge!

 

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This was made possible in partnership with The Singleton Foundation for Financial Literacy and Entrepreneurship. This video and more videos like this can be found on Millionstories.com.