The Missing Ingredients To Most Retirement Plans
Pop Culture Finance has all types of formulas for retirement success. I greatly encourage anyone to give these ideas a shot. Even though these formulas are simplistic in design and full of assumptions, a plan of some kind is better than no plan at all.
There is the plan that is entirely focused on saving. They write that if you save 15% each year and you will retire comfortably. Then there is the pan that says you need to have 15 times your current salary to have the retirement of your dreams. Those are just a few examples of many variations of formulas to get you to retirement.
By making a few adjustments, these general plans can be transferred to plans with a higher probability of being much more accurate. Most importantly, these plans are transferred from general plans that are full of assumptions to a more specific plan based on your values and goals.
Your retirement plan should have the following components to help increase the probability of your retirement being a great success:
Know your age of retirement and the amount you will need each year to fund retirement
Have an inflation rate present in the plan
Know how much you need to invest each year to hit your goals based on your….
Growth rate –What is the annual projected growth rate of your investments?
You need a risk strategy because markets don’t always go straight up
Have a monitoring system to know at all times if you are on track or not
The big key is simply this –
Don’t base your future on a bunch of assumptions. Instead, you want a plan that reflects your values, risk level, and specific/unique retirement goals. A good retirement plan is like having art painted by a noted artist. The painting reflects the artist's vision, not a paint-by-number kit.
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