By John Morris
In life, nothing is permanent in this world. Everything that
comes will definitely go. That is why it is best to put our
best foot forward and save more for the future. The best thing
that you have to start with is to have a retirement plan.
Some wait to long before they decide to plan for their future.
This is not a good idea because we can never tell what lies
ahead. So, here's how and when to start retirement planning:
1. The retirement year.
First, decide on what year you would like to retire. It is
always best to start something with a goal in hand. This will
keep you focused and determined to push it through.
2. Do your homework.
The best way to help you start making your retirement planning
is to consult your “employer-sponsored 401(k) or IRA,” or to
any of your retirement schemes and investigate on the
date of your mutual funds and see if it matches your target
of retirement. If it does, then start funding your nest egg
There are many instances where your plan can backfire. So, it
is best to have backups.
So, when making a retirement plan, better include a backup
will serve as a fallback in case your nest eggs fails or if
something else goes wrong. It is best that you do not depend
entirely on your funds because sometimes there are
circumstances that are beyond our control.
3. Opt for annuities.
When doing a retirement planning, you should take note also of
the different retirement planning strategies that will surely
make your plan work. One good example of a retirement planning
strategy is the annuities.
Basically, annuities are adaptable indemnity bonds that are
exclusively patterned to bestow additional wages at the same
time assist you accomplish “long-term” saving goals.
These annuities are the “long-term’ items recommended by most
insurance companies, though, there are brokers and other
financial establishments that provide this kind of service.
They will help you set-up a specific goal and aim for it.
There are two types of annuity: the immediate and the
In the immediate annuity, you start your retirement planning
giving a hefty amount of money to the insurance company or any
financial institution for that matter. After which, your
payment scheme will start at once. This type of annuity is
usually applicable to those who are already 60 years old and
On the other hand, the tax-deferred annuities you may choose
whether you will pay the retirement amount instantly or make a
monthly disbursement until the time you reach your target
This is usually appropriate to those who start their
planning early, generally those who are 20 years old at the
4. Consider the Modified Endowment Contracts.
Annuities had been heading the limelight for so many years
Most people would go for annuities, as this is the most
retirement planning strategy. However, like most plans, it is
still vulnerable to problems and crisis. That is why, it is
best to make an alternative option when making a retirement
The next best retirement planning strategy is the Modified
Endowment Contract or the MEC. This is, basically, one kind of
In reality, MEC is similar to annuity, especially the
tax-deferred annuity, in terms of the preliminary premium
rates. Though, they differ in terms of tax codes.
In annuity, the tax code appears to be very unfavourable
especially when the benefactor dies while the “annuity
accumulation” stage is in full force. This, in turn, makes the
deferred wage taxes on development suddenly becomes payable.
In contrast, the MEC resolves this problem by providing the
benefactor or the beneficiaries with an “insurance rider”
included in the agreement. The “insurance rider” is made to
hand over the full amount to your recipients absolutely free
from any taxes.
Moreover, MECs can give you the suppleness of choosing between
the variable and fixed account preferences. This, in turn,
make your retirement planning relatively easier.
Nevertheless, whatever retirement planning strategy you
the bottom line is that it is really important to save for
retirement as soon as possible.
Most often than not, people linger on a little longer before
they start making their retirement planning. This should not
the case because you can never tell what will happen next.
As they say, life is suspense; you will never know what it can
offer you until the end. So, the best time to do retirement
planning is now.
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