7 key steps for retirement life planning - HSBC HK (2024)

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7 key steps for retirement life planning - HSBC HK? ›

To thoroughly plan your retirement, the following 7 steps (in any order) are considered essential: think, budget, share, act, save, protect and review.

To thoroughly plan your retirement, the following 7 steps (in any order) are considered essential: think, budget, share, act, save, protect and review.

What is the 7 Percent Rule? In contrast to the more conservative 4% rule, the 7 percent rule suggests retirees can withdraw 7% of their total retirement corpus in the first year of retirement, with subsequent annual adjustments for inflation.

How much do I need to retire? 7 X your household income. With saving milestones to get you there.

Full Summary. The golden rule of saving 15% of your pre-tax income for retirement serves as a starting point, but individual circ*mstances and factors must also be considered.

What is the 80 20 retirement rule? ›

What is an 80/20 Retirement Plan? An 80/20 retirement plan is a type of retirement plan where you split your retirement savings/ investment in a ratio of 80 to 20 percent, with 80% accounting for low-risk investments and 20% accounting for high-growth stocks.

The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings.

#1: Find out where you stand.

Here are some items that could change as you age: your retirement date, expected future expenses, savings tally, and potential income sources. It's also a good idea to put your plan to the test from time to time. You can use a retirement calculator to see if you're saving enough.

Yes, retiring early with $3 million is possible. If you plan to retire at 55, you will have to account for 11 additional years of expenses and 11 fewer years of income compared to retiring at 66. However, with careful planning, $3 million can provide a comfortable retirement starting at 55.

December is often selected as a favored month for retirement due to several reasons: Year-End Financial Planning: Retiring at the end of the year allows you to maximize your retirement contributions and take full advantage of any employer-matched funds for that year.

Generally, if you have not already started receiving retirement benefits, you will want to sign up for Medicare three months before turning age 65. This is unless you have group health coverage through a current employer.

Many retirees fall far short of that amount, but their savings may be supplemented with other forms of income. According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.

One example is the $1,000/month rule. Created by Wes Moss, a Certified Financial Planner, this strategy helps individuals visualize how much savings they should have in retirement. According to Moss, you should plan to have $240,000 saved for every $1,000 of disposable income in retirement.

Under the Rule of 95, members can retire when their age plus their years of service equal 95 provided that they are at least 62 years old. For example, a member who is 62 years old could retire with 33 years of service rather than waiting until their schedule-based eligibility date (62 + 33 = 95).

What is the 6 rule for retirement? ›

The 6% Rule in retirement planning is a guideline that suggests you can safely withdraw 6% of your retirement savings annually without depleting your retirement corpus.

The 70% rule for retirement savings says your estimated retirement spending will be 70% of your pre-retirement, post-tax income. Multiplying your post-tax income by 70% can give you an idea of how much you may spend once you retire.

The 4% rule limits annual withdrawals from your retirement accounts to 4% of the total balance in your first year of retirement. That means if you retire with $1 million saved, you'd take out $40,000. According to the rule, this amount is safe enough that you won't risk running out of money during a 30-year retirement.

The 4% rule is a simple rule of thumb as opposed to a hard and fast rule for retirement income. Many factors influence the safe withdrawal rate such as risk tolerance, tax rates, the tax status of your portfolio (i.e., the ratio of tax-deferred assets to taxable assets to tax-free assets) and inflation, among others.

Master the 20:20 rule: Given your flexibility to retire late, you can start retirement planning in your 50s (by then your business is established). Assuming you retire at 70, you have at least 20 years to expand your investments. 2 decades, to invest for your next 2 decades.

In some cases, it can decline for months or even years. As a result, some retirees like to use a 3 percent rule instead to reduce their risk further. A 3 percent withdrawal rate works better with larger portfolios. For instance, using the above numbers, a 3 percent rule would mean withdrawing just $22,500 per year.