Answer to Question #255678 in Finance for Kajal

Question

Shyam is working in a private investment firm. Unlike his parents who had a government job and had retirement benefits, shyam lacks on that front being in a private firm. Now he is worried about his retirement years.

a. As an insurance agent, discuss the various Risk, which Shyam will consider while planning his retirement plan.

b. Also explain the various steps which will be involved in framing the retirement plan.

Answer 1

Solution:

a.). When planning for your retirement plan, it is critical to expect the unexpected. Some of the retirement risks that can arise include the following:

·        Personal and family risks which include employment issues, longevity, a change in marital status, and the needs of other family members.

·        Healthcare and housing risks that include unforeseen medical bills, the need to change living situations, and the cost or lack of available caregivers and care facilities.

·        Financial risks that include rising inflation, fluctuating interest rates, stock market volatility, and poorly performing retirement plans.

·        Public policy risks that include the possibility of higher taxes and reduced benefits from Medicare and Social Security.

 

b.). The various steps which will be involved in framing the retirement plan include the following:

Step 1 – Estimate your retirement age, which includes the timeframe you are left with to retirement.

Step 2 – Start planning your retirement as soon as possible in order to have a peaceful retirement.

Step 3 – Determine the amount that you require post-retirement to meet your needs and continue with the same lifestyle.

Step 4 – Calculate the future value of your current savings after covering all your expenses.

Step 5 – Cut down on unnecessary expenses that you can do without in order to achieve your objective or target.

Step 6 – Plan and create an ideal portfolio that you can afford.

Step 7 – Track and review your retirement plan regularly in order to ensure that you are on schedule to achieve your goals. Any changes in income, expenses, retirement age, and so on must be accounted for in the retirement plan.