Chapter 11 Personal Risk Management: Retirement and Estate Planning
While insurance is about protecting what you have, retirement and estate planning is about protecting what you may have in the future. Insuring what you have means finding the best way to protect it. Retirement planning, on the other hand, means finding the best way to protect the life that you’d like to be living after you stop earning income from employment. Estate planning involves protecting what you have even after your death. So retirement planning and estate planning are plans to create and then protect an accumulation of wealth.
Both types of planning also ask you to ask some of the following questions that you really can’t answer:
- What will my life be like when I retire?
- Will I have a spouse or partner?
- A home?
- A mortgage?
- Will I be disabled?
- Where will I live?
- What will I do?
- What would I like to do?
- When I die, will I have a taxable estate?
Planning, especially for retirement, should start as early as possible, allowing the most time for savings to occur and accrue. Ironically, that’s when it is hardest to try to imagine answers to these questions. Understanding the practical means to planning and saving for retirement can help you get started. If your plans are flexible, they can adapt to the unexpected as it happens, which it inevitably will.