Start planning today to ensure a comfortable retirement
The sooner you start planning for retirement, the better. Early planning provides you with the opportunity to improve your situation and to deal with the potential problems identified.

We have talked about many retirement planning issues. It is time to determine how much money do you need in order to be able to retire. Many factors influence the retirement decision; however, to determine the amount of your retirement plan income, use this Retirement Income Calculator. Fill it in as indicated and find out what you'll need for retirement.

Use this Retirement Shortfall Calculator to determine your projected retirement savings shortfall or surplus. Try the Retirement Planner Calculator to help you stay on track with your financial planning.

Similarly, time can also be your best friend when it comes to saving for retirement. To see how this works, consider the following table examining how dramatically your required monthly savings amounts change with time to reach the same NAF 100,000 amount.

Monthly Savings to Accumulate NAF 100,000

In the 1990s, financial planners developed a model based on a person's life cycle to help people understand retirement planning and other financial planning issues. The models may vary slightly, but they generally divide a person's life into the following five time periods or stages:

Stage 1 : Age of Majority
From the age of 18 to 30, a person is generally still single and first begins earning money as an adult.

Stage 2 : Age of Responsibility
The period from age 30 to 45 includes those with developing careers and growing families.

Stage 3 : Age of Maturity
Between the age of 45 and 55, people are theoretically approaching the height of their careers and family development.

Stage 4 : Age of Reflection
At age 55 until about 65, people are usually in the pre-retirement phase and have the "empty nest" syndrome to look forward to.

Stage 5 : Age of Tranquility
The last, but certainly not the least, stage in a person's life hopefully finds the retiree enjoying the fruits of his or her labors and dealing with post-retirement issues.

As you navigate through the life cycle stages, remember that most planning issues will involve answers to the following questions:

• How much time do I have left until I can retire?
• How much can I invest toward retirement?
• Will the magic of compounding work for me?
• How much risk am I willing to take when making my investment choices?

Stage 1: Age of Majority
 

Tip
Saving early is great, but it is not enough if your savings are earning little or no money. At a minimum, your savings and investments should be making more than the rate of inflation. There are numerous ways to fund retirement. The thing to remember is that being too conservative with your investments at this stage of the life cycle is a very bad thing.

You have to take a long-term investment strategy. Keep in mind that you are trying to build wealth. Although higher rates of return include higher levels of risk that something may go wrong, it is easier for you to bear the risk and recover from it when you are young. Don't be reckless, but save your conservative investments for your later years, especially prior to retirement.

Stage 2: Age of Responsibility

Tip
Given the fact that retirement is still about 20 to 35 years away, your investment plan should not be overly conservative. Ultimately, you must decide on the level of risk you are willing to bear. However, a combination of high-, medium- and low-risk investments, with corresponding rates of return, is probably the best way to go.

Meeting Your Savings Goal