Financial Planning & Money Management -- Does Your Retirement Plan Take Into Consideration "who You Are?" By R Gunnar Gelotte At Isnare.com Ezine Articles

One of the biggest challenges we all face is planning for retirement. The future is impossible to predict, and the further away we are from retirement the more difficult it is to determine what our financial needs may be when the time comes. A comfortable retirement depends on knowing how much money you'll need -- but knowing how much you need also depends on knowing who you are. "One size" does not fit all.

Are you a big spender? …If you expect to enjoy your retirement by traveling a lot, for example, then you'll need a pretty sizable nest egg. Or, if you want to move to a more expensive location so you can be near the golf course, by the lake, or at the seashore, you'll need more money for that, too. It goes without saying: the bigger your retirement dream, the bigger the bank account you'll need.

Are you a workaholic? …While it may be an attractive thought, the idea of not working for the rest of your life may actually make you miserable. Retiring at a later age or maintaining some kind of part time work in retirement may be better for you.

When did you start saving for retirement, and how much are you saving for it every year? Obviously, the sooner you can start saving the better… It is always wise to start saving and investing for retirement as early as possible and to allocate as much money for it as you can along with saving for your other, more immediate needs. This is especially true in today's world of dwindling pension plans and faltering Social Security & Medicare programs. Maximizing contributions to qualified retirement plans during your working years that offer tax-deferred growth, such as 401k plans and IRAs which can provide a variety of investment choices and diversification, is essential to maximizing long term growth of your retirement savings… But what kind of investor are you? What types of investments suit your personal tolerance for risk? Typically, the greater the potential return on an investment, the higher the risk. The lower the potential return, the lower the risk. The younger you are, the more risk you may be able to take. But the older you get, the less risk you may be willing to take. Your choice of investments depends on your answers to these kinds of personal questions. You'll want to be able to sleep at night while you let your money work for you, both before and after retirement.

If you are the kind of person who likes to live for today as if there's no tomorrow, then your current spending habits may require you to save a lot more the older you get. On the other hand, if your personality is such that you tend to save money wherever or whenever you can, you're more likely to have saved what you need at an earlier age.

Whatever the case may be, no financial advisor or consultant can tell you who you are. No one knows you better than you know yourself. Planning for retirement is as much of an art as it is a science. The "science" is about financial awareness, knowledge and discipline. The "art" is about personal awareness and how you apply your financial knowledge and discipline.

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