by Wayfarer

Created on: December 11, 2008

People don't plan properly for their retirement for one simple reason. They're scared!

It's not because they don't have the money, it's not because it's too complicated. It's because planning for retirement means facing the fact that you are aging. It means facing your own mortality.

It's one of those things we all know, but very few want to think about.

So, here are the facts.

* Retirement age needn't be old age.
* We all get old if we are lucky!
* Chances are your retirement will last longer than your childhood. It's too big a chunk of life to ignore!

Okay, so we have stepped aside from the people wearing blinkers; the people not wanting to think about. You are going to make your retirement years work for you.

You need to know how.

Start now. The earlier you start saving the more options you will have later. Okay, so you don't have much cash to put away right now. But it's a commitment thing. If you put a little away now, you will probably want to add to it next month. If you don't start this month, you probably won't do anything next month either.

So, commit. You're not doing it for the government. You're not doing it for your family. This is something you are doing for you!

Then you have to choose a retirement plan.

Retirement plans are thick on the ground with hundreds of organizations each putting their own attractive spin on the matter. Generally, they fall into two categories

* Defined Contribution Plans. If you have a steady guaranteed income and you want to commit to a certain monthly amount the kind of plan you can sign and walk away from then choose the Defined Contribution plan. Always be aware that the value guaranteed outcome might not be the same when you retire as it is now. It might be worth less, it might be worth more, depending on the economic climate. Defined Contribution Plans are often operated by companies for employees and there will be limitation on access before the plane matures.

* Defined Benefit Plans. These are funded by the company and the retirment payments made to the individual will be dependant on factors like length of service, last salary and so on. While the funds from these plans come from investments the operating companies are held liable for the pay-outs. If the investment portfolio does well then the company makes an extra profit, but if investments are down the company will have to make up the shortfall. Many companies are moving away from Defined Benefit plans, claiming the restrictions the plans put on the company may make

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