Page 168 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Unit 9: Retirement Planning-I

These uncertainties have transferred the financing of retirement from employers and the Notes
government to individuals, leaving them with no choice but to take their retirement planning
into their own hands.

9.2.2 Unforeseen Medical Expenses

While the failure of a social security system may not occur, planning your retirement on funds
you don’t control is certainly not the best option. Even with that risk aside, it’s important to
realize that social security benefits will never provide you with a financially adequate retirement.
By definition, social security programs are intended to provide a basic safety net - a bare minimum
standard of living for your old age.
Without your own savings to add to the mix, you’ll find it difficult, if not impossible, to enjoy
much beyond the minimum standard of living social security provides. This situation can quickly
become alarming if your health takes a turn for the worse.
Old age typically brings medical problems and increased healthcare expenses. Without your
own nest egg, living out your golden years in comfort while also covering your medical expenses
may turn out to be a burden too large to bear - especially if your health (or that of your loved
ones) starts to deteriorate. As such, to prevent any unforeseen illness from wiping out your
retirement savings, you may want to consider obtaining insurance, such as medical and
long-term Care insurance (LTC), to finance any health care needs that may arise.

9.2.3 Estate Planning

Switching to a more positive angle, let’s consider your family and loved ones for a moment. Part
of your retirement savings may help contribute to your children or grandchildren’s lives, be it
through financing their education, passing on a portion of your nest egg or simply keeping
sentimental assets, such as land or real estate, within the family.

Without a well-planned retirement nest egg, you may be forced to liquidate your assets in order
to cover your expenses during your retirement years. This could prevent you from leaving a
financial legacy for your loved ones, or worse, cause you to become a financial burden on your
family in your old age.

9.2.4 Flexibility to Deal with Changes

As we know, life tends to throw us a curve ball every now and then. Unforeseen illnesses, the
financial needs of your dependents and the uncertainty of social security and pension systems
are but a few of the factors at play.

Did u know? Regardless of the challenges faced throughout your life, a secure nest egg will
do wonders for helping you cope. Financial hiccups can be smoothed out over the long
term, provided that they don’t derail your financial plan in the short term, and there is
much to be said for the peace of mind that a sizable nest egg can provide.

9.3 Retirement Planning: How much will I Need?

Till now that we’ve been through the important parts of the why, let’s start tackling the how of
retirement planning by asking the No.1 retirement question: “How much money do I need to
retire?”

LOVELY PROFESSIONAL UNIVERSITY 163