As the human population have pushed themselves towards a modern era, the way lives are lead and planned for have also changed. Since we have realized the close to full potential of our brains, we have used its application in all possible ways to better our lives. Since the birth of a child, till the last counting days of breathing, there is a demand to plan for and stay prepared for each and every step that one takes in life.

Retirement is one such time of life that all humans work their hardest to reach. There has come to being an insatiable demand of plans and protocols that makes one’s retirement life bliss and hassle free.

Retirement annuity is one such retirement planning mode wherein sums of amount are paid in installments until the proprietor of the plan reaches a pretty selected retirement age.

The agenda of this plan is derived from the fact that one needs to safeguard their futures regardless in what stage of life they are. A person is ideally expected to stay employed starting their early twenties until a maximum age of sixty or sixty-five. This age has universally come to have been accepted as an ideal age to retire as a human’s mind and body starts slowing down from its original form of being at this point of life. The person might not be completely unfit to work; however, this is an age wherein the individual’s body demands rest and leisure.

Keeping such courses of life in mind, companies and conglomerates all over the country have come up with plans and fun allocation systems wherein an individual can start accumulating funds on a regular basis, depending on how the person’s payment cycle works. Here the person can set up a direct debit from his or her salary account. This can be started as early as one begins work in the early twenties.

In the modern times, employment agencies and companies who employee individuals in large scales have devised clever ways to incorporate such pre-decided plans in ones pay cycle, wherein a certain amount of the premium for the retirement annuity is paid by the individual and the other half is borne by the employer.

Such plans were first included in the financial planning of an individual by the federal government, wherein the plan was to create a wholesome and safe financial longevity for everyone.

Based on the type of payout of the benefits, annuities are classified as immediate income and deferred income (that includes fixed payment, variable payment, equity indexed) annuities. Although annuities provide tax benefits, there are a lot of costs involved in it when compared to traditional investment plans. Once the investment type is chosen, it is important to consider other aspects of investing in annuities to earn the best income.

• Expenses involved in an annuity are surrender fees, commissions and monthly fees.
• Payment for purchase of an annuity can be done through single or series payments or through social securities.
• Costs involved on early withdrawal may include annuitization, systematic withdrawal or lump sum amount.

The benefits payout options is also another aspect that needs to be looked into to earn maximum income. These can be broadly categorized into three types:

• Guaranteed period payment: The return of the principal (initial investment) and the interest will be paid back by the insurer within an agreed period of time. It may be paid back in series or as a lump-sum amount. Here, the investor can be sure of getting back all the benefits within a certain time or while he is alive and the insurer does not retain back any of the earnings of the investor in case of his death.
• Lifetime payment: The principal and the interest earned based on the initial set rate will be paid on a monthly basis to the investor until he is alive. While an early death may not earn maximum benefits, a longer life means earning beyond the growth of the actual investment.
• Survivor payments: The investment and earnings is transferred to a joint applicant or a nominee even after the investor has died. This will help in financially aiding the survivor (spouse, children or other nominee) in the absence of the investor. The payouts may last longer in this case and thus earnings will be higher.

Apart from providing benefits of tax deferral, fixed payment annuities also offer a slightly higher rate of growth due to the following reasons:

• The surrender charges usually reduce with increase in number of years as compared to IRS.
• Maturity is usually between one to ten years and mostly there will be automatic renewal unless voluntarily withdrawn.
• Rate of interest will be updated with the current rates at the time of renewal.

After making a comparative analysis, deferred income annuities seem to offer a guaranteed retirement income. These annuities pay around 3-4% higher than a standard 10 year treasury bond. Also, some tax rules allow consumers to invest 25% or up to $125,000 into an annuity. But this required IRA withdrawals to begin after completing 70.5 years of age and income to be withdrawn by the age of 85. These are often called as qualified retirement plans and are regulated by ERISA. Any qualified plan must provide annuities in the form of SLA (Single Life Annuity) and a QJSA (Qualified Joint & Survivor Annuity).

Aging might not always push you to mundane existence. Retirement communities, which have become a trend, can shift the perception. They come in all shapes and sizes and are restricted to an age group of 50 and above to provide suitable amenities. Yes, at that age, one might not have full motor functions or might suffer from chronic conditions like diabetes, but the communities are equipped to provide all the help required for wellness to overcome the challenges easily and live a fuller active life.

Gone are the days when it considered cruel to not take care of an aged parent. With fast-paced lives of the present generation, the parents themselves would rather prefer living in a retirement community with all the right facilities. It’s time they too relax and have some fun as well, by staying close to like-minded people of their age group. Such niche communities are increasingly popular, catering to seniors based on ethnicity, sexual orientation or even hobbies, apart from the regular retirement facilities based only on age as a factor.

Understand the pros and cons
The most important benefit of choosing a retirement community, especially a Continuing Care Retirement Community, is that you will be able to continue living in the same community even as you grow older. You might need more assistance as you age and would be shifted from an independent living facility to an assisted living facility and then to a nursing home type, if you require constant care. They are predominantly set up in places with a cozy weather for the residents to live comfortably. The Villages in Florida, The Atria in New York, Sun City Hilton Head in Bluffton and Laguna Woods Village in California are some of the excellent retirement homes. With growing popularity, the concept of retirement communities has even expanded to cities though it’s expensive. They have a host of indoor and outdoor activities ranging from swimming to golf for the residents to lead an active yet relaxed post-retirement life.

Make an informed decision
This concept makes a retired life sound amazing, right? It really is. One gets to do all that we typically tend to miss during our busy adult lives. As a retiree, you have all the time in hand and the right company to celebrate life with. The key is to start planning well early, so you make the investment while you are still in your prime of life. And your options are wide open in terms of locale, environment, budget, interest and so on. Each of these communities has their own payment terms, and the cost involved might vary hugely just like any other real estate. Factors such as cost of living, safety, economy, and taxes have to be taken into account.

Do your research, shortlist few, pay a visit, experience the setting and see if you would enjoy being there every single day. Once you find a happy place, make the investment confidently and have well-balanced Golden years.
Retire in peace and in style

Retirement plans may be going the way of the dinosaur but the younger generation of today should be aware of the fact that saving more for retirement is the wisest thing to do. Listed below are the simplest, no-nonsense and easy-to-understand retirement savings plans and accounts that one can choose:

403(b)/401(k) offered by employer: This is the best and easiest way for you to begin investing for retirement. Employee contributions go through payroll deduction, and employers match employee contributions. If you decide to quit your job, make sure that you roll over the account into the 401(k) plan of your new company or into your own IRA. A 403(b) is an option for employees of non-profits, teachers, etc.

Solo 401(k): For sole proprietors, the best thing to do is to set up an individual 401(k) account and make contributions as both the employer and employee up to $54,000($60,000 for individuals above the age of 60 years).

SEP (Simplified Employee Pension) IRA: This SEP IRA is usually used and employed by proprietors and owners of small-sized businesses or those who are self-employed such as freelancers. Employers can contribute either $54,000 or an amount which is up to 25% percent of their income, in 2017, whichever amount is lesser. SEP IRAs are easier to set up as compared to a solo 401(k) account. One should remember that if one has employees, then the employer must make employee contributions for those who meet specific requirements.

Simple IRA: A Simple IRA retirement plan allows companies with less number of employees (lesser than 100) to arrange for IRAs which involve lesser headache and paperwork. In a Simple IRA, an employer should either make unmatched contributions or match employee contributions, with the limits being up to $12,500 in 2017, with an additional $3,000 allowed for people above the age of 50.

IRA: IRAs are the big kahuna of retirement investment plans. You could contribute up to $5,500 a year to an IRA, which grows tax-free ($6,500 if you’re over the age of 50). You could set up an IRA at a brokerage firm or a bank to hold a motley of investments such as cash, bonds, MFs and stocks which are earmarked as retirement savings. If you’re not covered by a retirement plan at work such as a 401(k), you get the advantage of a full deduction from your income, no matter how much it is (exceptions are if you file jointly with a spouse who has a work retirement plan or if you are covered by a 401(k) and your earnings exceed $71,000).

There’s more to retirement planning than just funding your 401(k) or IRA. One of the chief reasons why people engage a financial planner is to know if, and when, they can retire. Just the thought of retirement can cause anxiety and many feel overwhelmed and unprepared.

Listed below are some retirement planning mistakes that one should avoid.

Not having a plan
According to a survey, currently close to 48% of the working American population hasn’t calculated the amount of money they need to save for retirement. The truth is once you have a goal, actions to achieve the goal materialize. It isn’t just enough to fund your 401k and leave the rest one needs to have calculated retirement goals, have a step-by-step action plan and indulge in a bit of personal finance planning for their own sake.

Calculating figures wrong
One needs to have a ballpark figure as to how much they’ll need in retirement. Higher assumptions make the goal appear unattainable, lower assumptions could lead to a difficult financial situation later. The general thumb rule is that one needs at least 80% of their current annual income in retirement bear in mind that in the first few years of retirement one will spend more on lifestyle (travel, entertainment, eating out) while in the later years, health costs will escalate.

Not planning long-term care
As per the US Dept. of Health, over 70% of denizens above 65 years of age will need care at some point in their lives, and the money required for care today is staggering. Since medical costs are expected to continue increasing faster than inflation, they will tend to add up quickly. Hence, it is important for people to know of long-term care options, calculate how much they’d need and keep aside money in their retirement funds for these future medical expenses.

Don’t start saving early enough
The most common mistake most people make is that they believe they’ll have plenty of time for saving and planning for retirement. However, the truth is that at every point in life, whether it is first job, kids, their school, a house or expenses for parents, one will think the same thing, until it is of course too late. One should begin planning for retirement early so that no big changes are required in one’s lifestyle and you end up multiplying money with time over time, amassing a much-needed nest egg later.

Another mistake people make is not updating their retirement plan. Since markets change, it is important for retirement plans also to be revised along with them to keep them relevant.

Gone are the days when the working class in the country could get the Social Security or an employee pension plan to cover the costs incurred in their later years. Today, planning for retirement has become imperative. There are numerous options out there for individuals to save better to live comfortably later in life.

The thumb rule is not sticking to a single plan or putting all your eggs in one basket:

Pensions
All you need to do is stay in the job long enough to qualify for pension, retire and collect the money which the employer contributes and which are professionally managed. However, pension plans are most common for government/municipal workers, rather than those in private ones, and mostly aren’t adjusted for cost-of-living. So, you may need to supplement this plan with another one.

Defined Contribution Plans
According to most financial advisors, these are some of the best retirement plans because they are offered by employers who match a certain portion of the employees’ contributions. It requires very little effort since employee contributions are deducted from their paycheck. Since contributions are almost an equal match, it’s close to 100% return on your money, and with plans such as the 401k or the 403b, people are in control of their future.

Roth IRAs
Roth IRAs are retirement accounts funded with taxed dollars where individuals enjoy the advantages of tax-free withdrawal and growth. One can even combine Roth IRAs with other plans such as a 401k to churn out a well-balanced plan that allows them to make both before-tax and after-tax contributions. However, Roth IRA has contribution and eligibility limits that depend on an individual’s tax filing status and modified adjusted gross income.

Traditional IRAs
Traditional IRAs have the same contribution limits as Roth IRAs, but without the eligibility and income restrictions. These plans work best for people who have less time left to retire, since one can enjoy the benefits of tax-deferred growth and tax-deductible contributions.

SEP IRAs
This is one of the best retirement plan choices for the self-employed such as sole proprietors or freelancers. The contribution is huge, cost is lower and the plan is easy to administer and manage. Good income combined with very less tax deductions amounts to a large amount off your tax bill, and a lesser income means no contribution.

Social Security
Social Security is said to benefit 39% of the older American populace’s income, with 9 out of 10 people over 65 years of age receiving Social Security. Despite the hype and hoopla surrounding it, Social Security is still relevant and important, with timing being everything.

Real Estate
If you haven’t saved enough or at all, real estate is a great option. However, one must be warned that with higher returns comes a greater risk.

There’s no fixed age for you to start saving for retirement; the sooner, the better. It is imperative that you save enough money for your retirement so that you wouldn’t have to rely solely on Social Security benefits. Your retirement savings should be enough to take care of your and your spouse’s needs without depleting it before its preordained time. The truth is you can never calculate the exact amount of money you need to lead a comfortable life post-retirement, but you can at least arrive at an interim amount needed for your retirement.

To calculate the amount of money you need to save for retirement, you can use the free retirement calculators on the Internet. However, before you decide to use the retirement calculator, you need to consider certain other vital factors that determine how much money you will be saving for retirement, which are as follows:

Current savings
Your current savings play a major role in determining the amount of money you will be saving for retirement. If you haven’t taken your retirement savings seriously, and not saving for retirement diligently, then you will face undesirable consequences in your retirement days. According to financial experts, you will need about 70% of your current income in order to maintain your standard of living post-retirement.

Inflation
Before you start saving for retirement, there’s another crucial factor you need to considerinflation. It has been one of the major concerns of retirees since it leads to an increase in the amount of money to be saved for retirement. Retirement isn’t simply for a year or two, it spans out to several decades; thus, it is imperative that you take the possibility of inflation into account while saving for retirement since it will help you maintain your purchasing power in the face of such adversities.

Risk tolerance
Saving for your retirement will involve making sound investments that will yield benefits in your retirement days. Investments often test your ability to withstand any risks since the market is quite volatile, but this isn’t a serious situation if you still have forty years to retirement. However, if you are considering investing when you are nearing retirement, it is imperative that preserving your capital is your biggest priority since your risk tolerance will be quite low.

Taxes
Taxes won’t leave you alone even in your retirement; you still have to pay taxes as per your income sources. So, when you are saving for retirement, ensure that you acknowledge the fact that your taxes will be definitely eating into your retirement savings. However, you are excluded from paying taxes in your retirement if you depend solely on your Social Security benefits, but this isn’t a feasible thing to do.

Before you determine the amount of money you will be saving for retirement, consider the above-mentioned factors since they influence your retirement savings.

How do you calculate your income and the money that you will earn once you retire? Post retirement life calls for a sound financial background, wherein you don’t want to borrow from others. Here is an insight about retirement calculators and what makes them a must have to check your financial stability at the retirement age.

What is a retirement calculator?
Retirement calculator is a tool that is specifically devised to provide you a fair idea on what your retirement income should be like. This helps in anticipating the future income, which will be needful during the post-retirement days to lead a good life. It is also necessary to note here that the retirement income helps in taking care of sudden requirement of money such as medical emergencies.

Best retirement calculator for a perfect result
Some of the popular retirement calculators are Fidelity Retirement Income Planner, FinancialMentor Ultimate Retirement Calculator, FIRECalc, Flexible Retirement Planner, to name a few. These calculators come with their respective features that calculate the income and also reflect some of the modern retirement planning, business income, etc.

Finding the right retirement calculator
In order to find the best retirement calculators, the first and basic thing to do is to search the internet for best tools for calculating retirement income. You will get a number of websites providing reliable links and information on retirement calculators. These websites will either offer you some of the popular retirement calculators which are free of charge or some paid options.

One of the ways to find the best bets is to compare the various retirement calculators available online. This helps you to understand the different types of retirement calculators available and what suits your specific needs. It is always advisable to compare retirement calculators online and understand the different specifications and details that come along. There are some websites providing customer reviews. These are the customers who have used these online retirement calculators and will give true feedback about the same.
There are a few online forums too that have people discussing on various retirement calculators and posting their comments online. This too can help you figure out which are the best picks for retirement calculators.

Retirement calculator – an important tool!
You might contact a financial planner to calculate your income and know what will be the amount you’ll be getting once you retire. The retirement calculators help you to get a fair estimate about your retirement income. These can also be used by your financial advisors. By using a retirement calculator, you can get the answer to one of the most crucial questions, whether or not you are financially independent at the time of your retirement!