Financial Planning and Retirement Income
Expert-defined terms from the Certified Professional in Retirement Coaching course at London School of Business and Administration. Free to read, free to share, paired with a professional course.
Financial Planning #
Financial Planning
Financial planning is the process of setting goals, assessing assets and resourc… #
It involves creating a roadmap for managing finances, including budgeting, saving, investing, and managing debt. Financial planning helps individuals and families achieve financial security and build wealth over time.
- Budgeting: The process of creating a plan to spend money wisely and save for f… #
- Budgeting: The process of creating a plan to spend money wisely and save for future goals.
- Asset Allocation: The distribution of investments across different asset class… #
- Asset Allocation: The distribution of investments across different asset classes to achieve a balance of risk and return.
- Retirement Planning: A subset of financial planning focused on saving and inve… #
- Retirement Planning: A subset of financial planning focused on saving and investing for retirement.
- Estate Planning: The process of arranging for the transfer of assets to benefi… #
- Estate Planning: The process of arranging for the transfer of assets to beneficiaries upon death.
Example #
A financial planner helps a client create a comprehensive financial plan that includes saving for retirement, purchasing a home, and funding children's education.
Challenges #
Keeping up with changing tax laws and investment options, staying disciplined in following the financial plan, and adapting to unexpected life events.
Retirement Income #
Retirement Income
Retirement income refers to the money received during retirement from various so… #
It is essential to plan for retirement income to ensure a comfortable lifestyle after leaving the workforce. Effective retirement income planning involves estimating expenses, evaluating income sources, and creating a strategy to generate sustainable income throughout retirement.
- Social Security: A government program that provides retirement, disability, an… #
- Social Security: A government program that provides retirement, disability, and survivor benefits to eligible individuals.
- Pension: A fixed sum paid regularly to a person, typically after retirement, b… #
- Pension: A fixed sum paid regularly to a person, typically after retirement, based on years of service and salary.
- Annuity: A financial product that provides a series of payments over a specifi… #
- Annuity: A financial product that provides a series of payments over a specified period, often used for retirement income.
- Withdrawal Rate: The percentage of retirement savings withdrawn annually to fu… #
- Withdrawal Rate: The percentage of retirement savings withdrawn annually to fund living expenses.
Example #
A retiree receives income from a combination of Social Security, a pension, and investment withdrawals to cover living expenses in retirement.
Challenges #
Managing longevity risk (outliving retirement savings), dealing with inflation eroding purchasing power, and balancing income needs with investment risk tolerance.