Preparing for Retirement Funds

Did you know? Productive age just the best age to spend retirement.

Perhaps, those aged 20 to 30 years had never thought to prepare for their retirement well. They assume, retirement is the business of the people aged 45-60 years. Moreover, if they are civil servants, who incidentally got a pension from the state.

In fact, age 20-30 years is most appropriate when preparing for retirement because it is on golden period in the career, life is still a bit of dependents, the body is still healthy, so they can save a little by little to prepare the "House of Wealth". The following strategies and steps to prepare the pension fund, as stated Fauziah Arsiyanti, SE, MM, ChFC., Independent Financial Planner of the First Principal Financial Pte.Ltd Singapore.

1. Set Goals and Dreams

Preparation of the first face of retirement is "knowing yourself." What are your dreams, whether building your own business, and so forth? Imagine it's a good dream, so clearly illustrated in your mind. Believe that "Will it come true." Dreams are believed to be truly motivates us to achieve it.

2. Identify Characteristics of Self

The next step is to identify the characteristics themselves. There are several basic categories of investors, ie conservative, moderate, and aggressive.

   - Type conservatives are investors who do not want to lose money anyway at all. For that, he was willing to "sacrifice" to get return (Outcome) of the infinitesimal origin secure funds. Types of investments are suitable for conservative investors is also very limited, for example, savings and time deposits.
    - Type moderates willing to take less risk from getting return rather in the medium term. Type of investment that can offer more diverse. In addition to savings and time deposits, other alternatives such as gold, land and property as well as money market mutual funds and fixed-income funds can be selected.
    - Aggressive type of investors who take risks. In a sense willing to lose a number of points of origin of capital gain in a relatively long period of time. Investment options vary widely. In addition to the types of financial instruments above, can add a mixture of mutual funds and stocks and other financial products.

In essence, low risk low return, high risk high return. If you are only willing to take a little risk, then the results are too few. However, when taking more risks, the results obtained would also be a lot more.

3. Extend Knowledge

There are so many financial instruments that could be used as a vehicle to achieve financial goals, including retirement with a secure and prosperous. However, in no way encouraged to take risks without knowing the consequences, even if you are an aggressive investor type though.

That is, if you want to take an investment, you must know the exact intricacies, risks and factors that affect it. The goal is that you can manage and minimize risk but still get the maximum return.

So, many-many are asking, reading, or use the services of an independent financial consultant. They will provide objective analysis and stand for your interest in providing advice to financial problems.

4. Disciplines & Caution Against Various Changes

Everything to do with the discipline would have yielded satisfactory results. So is investing on a regular basis to prepare the pension fund. If you are not disciplined, although detailed, the result will not be maximized.

You also need to constantly review there-planning your retirement on a regular basis, because a person's life is not stagnant. There will be many changes, both changes in income or expenses change. For example, the birth of a child or financial goals change. Consult these changes to your financial planner.

5. Build Networking

A strong network is one of the success of a business or job. Retirement can be a scourge for those who are not ready. However, for those who managed to build a solid network during the work, life still excites even financially rewarding.

6. Understanding Inflation

Inflation is the process of rising prices in general and constantly associated with the market mechanism. The reason could be due to the increasing consumption, excess liquidity in the marketplace that triggered the consumption or even speculation, and non-current distribution of goods.

In other words, inflation is also a process of decline in currency values ​​continuously. As an illustration, in 2010, with the money of USD 50 thousand we could buy a chicken tail. But, in the year 2011, a chicken the same village can no longer be bought with a price of USD 50 thousand, but rose to $ 55 thousand. Inflation is affecting preparations for retirement savings. Therefore, it is very important to find savings of financial instruments that have a return exceeding inflation. For example, mutual funds, property, or gold.

Think about the select Product

After learning the principles and strategies for retirement planning, it's time you know the preparation of pension products that are in the market in addition to saving money.

1. Product Annuity

Product annuity is a financial product at the time of maturity or when you plan to retire to give money by 100 percent the sum insured. Then from starting a pension until a certain age (usually 70 years) gives a sum of money every year, plus a certain age (age 70 years) given again by 100 percent the sum insured.

The amount of the sum assured will be different depending on the discretion of each financial institution. Thus, the scheme exactly as pension. The difference is, we can set yourself how much money we will receive each year.

2. Financial Institutions Pension Fund (Pension Fund)

Pension Fund is a pension plan that held the government. Some private financial institutions also sell these products, but the calculation of fixed annuities is determined by the government. The advantage of this program is a retirement pension can be accelerated until the age of 45 years. When we retire, 20 percent of the pension will be paid, after which the remaining 80 percent will be paid in annuities. Had pension recipient dies, can proceed received by the spouse or child.

3. Pension Lump Sum

The workings of the pension program is similar to the Pension Fund, but when entering retirement, the money received in a lump sum amount or 100 percent of the sum insured. Typically, for this program, companies that buy or office premiums, and employee benefit. Typically, some financial institutions provide the freedom for companies to choose the type of investment, can be in the money market, bond, mixed, stocks, even the sharia. So, can actually be adjusted to the characteristics, capabilities, and corporate financial goals.

4. Own pension fund with Mutual Funds

You also can use their own savings scheme with mutual funds. This scheme is very flexible, because it adapted to the financial condition. If in a month, you can not save, then save for retirement this can temporarily "closed" until the financial condition of re-lets.

Illustrative Cases

Rahma (30) has a monthly salary of Rp 10 million. After deducting a monthly fee of Rp 6 million, the remaining $ 4 million. Rp 2 million is used to save the future of his children every month. Means that, every month, Rahma could set aside money amounting to Rp 2 million for retirement savings preparation.

After consulting with the Financial Planner, Rahma investing (saving) money amounting to Rp 2 million per month into stock mutual funds. Because Rahma retirement plans at age 55 years, so he planned to save every month for 15 years. It is assumed, return mutual funds remain, and it is assumed Rahma always save every month, then at the age of 55 years, Rahma has a pension of roughly $ 2.3 billion.

Benefits of choosing their own retirement funds with mutual funds is that, if at a time, Rahma not able to save for retirement, then this is not a problem. Can save it off first while, until the financial condition of re-lets.