4. Assess Risk Tolerance vs. Investment Goals
Whether you are a normal person or a professional money manager who is considering the investment decisions, the most important step in retirement planning is arguably a proper portfolio allocation that can balance the concerns of risk aversion and return objectives.
You need to ensure that you are willing to face the risks being taken in your portfolio and make clear what is necessary and what is a luxury. You should seriously talk about this issue with your financial advisor and with your family members as wells.
Markets will go through long cycles and if you are investing money, you can afford to see your portfolio value rise and fall with those cycles. When the market declines, you should buy instead of selling.
5. Stay on Top of Estate Planning
Another key step in a well-rounded retirement plan is estate planning, and each aspect requires the expertise of different professionals like lawyers and accountants in that certain field.
Remember that life insurance is also a major part of an estate plan and retirement-planning process. A proper estate plan and a life insurance coverage makes sure that your assets are distributed in a manner of your selecting and that your loved ones will not have to experience financial hardship after your death. A carefully outlined plan also helps you avoid an expensive and often lengthy probate process.
Another crucial part of the estate-planning process is tax planning. If an individual wants to leave assets to family members or a charity, he or she must compared the tax implications of gifting the benefits and passing them through the estate process.
A common retirement-plan investment approach depends on producing returns that meet yearly inflation-adjusted living expenses at the same time preserving the value of the portfolio. The portfolio is later transferred to the beneficiaries of the deceased. Therefore, you should consult a tax advisor in order to determine the correct plan for the individual.