Retirement Planning Software, Is It Worth it?

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retirement planning

We live in the age of technology. We have access to so much today that even twenty years ago seemed unimaginable. Especially during the last couple of years as the world has endured a pandemic, technology has advanced even further and new developments continue to be made all the time. One thing this has meant is that there seems to be software for anything we need. There is so much software we can access and usually so much choice for each and everything. While the amount of software and the number of choices we have before us could sometimes overwhelm us, these can also be very useful tools for so many areas of life. One area that is sometimes put off and isn’t thought about is planning for our retirement. But you guessed it, retirement planning software is available to help us with this too. Planning for our retirement may seem too hard, especially with the tough financial situation many are facing right now. We may feel we need the money now, and we will worry about our retirement in the years to come. But it is beneficial to start planning for our retirement as soon as possible.

Why plan for retirement so early?

It is quite simple really, the earlier we start to plan and save, the more money we will have for our retirement. Especially if financial conditions continue to deteriorate, the more we have in our funds the better. But planning is really important if we want to benefit fully from our retirement fund. This involves having goals for our retirement that we will be working towards and balancing these with the number of years we have until our retirement. The closer to retirement age we are, the fewer options we will have. You will want to consider options that will help your money to grow the most within the time you have.

Where to start with retirement planning

Before delving in there, it would be best to calculate how much you will need to save. This would include working out a realistic amount of interest you could make on your money. And it would obviously be based on things like your wages, what age you plan to retire at etc. The average American spends twenty years in retirement, so you want to be sure you have enough to cover everything for at least this period of time, also taking into account the inevitability of inflation rates.

One line of advice to have a secure and comfortable retirement is to save approximately twelve years of your income by the time you retire. Of course, this is not possible for everyone. This is more of an option for those sorting out their retirement plan earlier rather than later.

What things could affect a plan?

There are a number of things that could affect your plan and how long your retirement savings will last you. One thing to consider is how and where you plan on spending your retirement. For some, the plan will be to have the house paid off so fewer outgoings. But with a secure base at home, they may plan to spend their retirement traveling the world and seeing new things. While this can be exciting to plan for, it will certainly affect your savings and each trip will deplete them quicker than staying at home would. Others may choose to plan for something a bit different. They may decide that they would love to live in another country. There are many beautiful countries that cost considerably less to live in and would have the opposite effect on your retirement fund than traveling the world – they could make it stretch much further while still being able to enjoy luxuries.

These are just a couple of things that could affect your plan. Another big way your plan could be affected is whether or not you will decide to start a family. For some, they never see kids in their future so might choose to leave this out. Others may be unsure or may even decide not to have any but still account for the possibility by considering this when making a plan. For others, life is all about starting that family. But as we all know, kids and everything that comes with them aren’t cheap. Having kids will most certainly take a massive chunk out of your savings, and the more you have, the bigger the chunk. So, it goes without saying really, but the size of family you have, if you have one at all, will affect how you plan for your retirement.

Lastly, you should consider which retirement accounts are tax-advantaged. This will also play a part in the type of plan you put together.

What to do next

Once you have made decisions on the choices mentioned above, you are ready to start a plan. Obviously, the age you are at now and the age you plan to retire are the starting point from which to go from. If you are still relatively young and have many years before retirement, then you will be able to take some bigger risks. For example, stocks are one of the riskier options out there, but over such a long period of time, these stocks are likely to serve you well.

The aim is to make sure the amount you are getting out of your investments is ahead of inflation rates. As we said earlier, inflation rates are inevitable, and you want to stay ahead of them. If you don’t, they will take a lot out of your savings. Even what may seem like a small amount annually, can actually be a huge chunk of your overall savings by retirement age.

Of course, if you are looking at a retirement plan at an older age, rises in inflation isn’t as big a worry as it is for someone with many working years ahead of them. And you will want to be a lot more careful with your money, so may wish to stay away from stocks. While you may not get as much back, your money will be more secure and could provide you with a steady income.

Summary

Making a retirement plan takes a lot of thought and preparation. But there are resources out there that can help you with the process. Using retirement planning software could be just what you need to help you through the planning.