by D. Victor

Created on: December 13, 2008   Last Updated: December 29, 2008

Considering that many people spend about a third of their lives in retirement, it should not be left to chance. Enter retirement planning; a financial planning method that attempts to adequately prepare you for the period in time in your life when you cease working. In a broader sense, planning for retirement can include social and psychological preparation. Even though 65 may be the new 50, this does not diminish the role of retirement planning. Retirement planning for young adults and more senior persons is important for at least five reasons:

1) The future is uncertain, but planning gives us greater influence over it.

2) If you do not plan, you risk outliving your life savings and surviving in poverty

3) The average person could spend about a third of their life in retirement

4) Inflation and purchasing power risk will affect our future income

5) We would be more prone to health problems and illness closer to retirement.

From a financial perspective, retirement planning involves considering what you want your retirement to be and how you are going to finance your dreams. Some questions that you need to consider when planning for retirement include:

a) When do I plan to retire?

Retirement can be either voluntary or involuntary, but you must have an idea when you would be most comfortable retiring. Statistics have revealed that those who retire earlier may have a longer life expectancy on average. Choosing when you retire can impact on how long and how you survive in retirement.

b) How much would my retirement cost?

This would depend on a combination what you want your retirement to be like and adjusted living expenses. It would be important to assess today's living expenses and project future expenses on the basis of a projected average rate of inflation.

c) What sort of financial products should I have by the time I retire?

As retirement planning is a subset of financial planning, you need to understanding the changing role that products play in your life as your situation changes. Retirement planning helps you think about these. Certain products are best accessed before you reach your retirement stage.

Your dreams would then be translated into goals and inflation adjusted targets. Retirement planning can be undertaken by any adult- even those who are in retirement already. Some key elements of retirement planning are:

1) Retirement dreams

Before you do anything, consider what you want your retirement to be like. Some people want to globe-trot, while others may prefer

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