What exactly is retirement income planning? by Robin Trimingham
Retirement income planning is defined as a year by year timeline that shows where your retirement income will come from throughout your life expectancy.
This is different from the sort of retirement planning that everyone has heard about in that “traditional” retirement planning is the process and associated strategies of “saving” for retirement; while retirement income planning is the strategy that you will employ to “spend” your money once you cease working.
Before we go any further, let me remind everyone that I am not a certified financial planner and this article is for educational purposes only. I don’t give investment advice and nothing that I write about should be mistaken for financial advice. If you have questions about anything to do with finances or money – please talk to a trained expert.
So why am I writing about this?
Because knowledge is power when it comes to managing your money. The more you are familiar with the financial terminology and the better you understand what your options are, the better the chances are that you will figure out how to maintain a stable income for the duration of your retirement life. Conversely, the lower the level of your retirement financial terminology literacy, the more likely you are to make a poor retirement income plan.
How big a problem is this?
According to a new survey by The American College of Financial services, referenced by Forbes this is a very big problem as 75% of the people that took their 38-question retirement planning quiz failed.
Now here’s the scary part, 61% of the respondents stated that they were “highly knowledgeable” about retirement planning, but only 33% of this group of people were actually able to pass the literacy quiz, meaning:
“this overconfidence in perceived knowledge could lead to retirement planning problems, as many believe they know more than they do when it comes to retirement planning”.
Even more troubling is the fact that only 17% of all female respondents passed the quiz because women tend to live longer than men, are usually retired for more years, and frequently have less money to live on overall.
When I read this, I decided to try the quiz myself and scored a whopping 68%. (There is a link to the quiz in the Forbes article above).
The quiz is tough but I highly recommend that you do go ahead and give it a try because it generates a detailed explanation of each question when you receive your results. Even if you get all the questions wrong, you will come away with a great list of things to learn about to improve your financial literacy, as well as topics to discuss with a financial expert.
By Robin Trimingham