Life passes by in a flash of great times and hard work. Yet rarely do people pause to consider their financial future, more specifically, their retirement. Retirement planning tends to fall by the wayside among younger professionals, so much so it is not until their later years that they stop and take a serious look at how they will manage their money after they have left work. Even in planning for retirement, some do not plan adequately for unexpected circumstances that can throw off even the best retirement plan. Here are five factors in retirement planning you should address to help you adequately cover your golden years.

1. Catastrophic Risks
Not enough people plan for catastrophic risks in their later years. These are the “worst of the worst” events that can severely impair your retirement income and quality of life. Unforeseen catastrophes such as the death of a wage earner can dismantle retirement planning, but this risk can be mitigated by purchasing adequate term life insurance. Other significant life risks can include disability and liability matters.  Again, these risks can be managed by purchasing disability and personal liability insurance; insurance can easily reduce these risks and provide reasonable coverage for minimal cost.  As we age, health issues become more prevalent; when planning for retirement, be sure your plan includes adequate health insurance  and long-term care provisions.

2. Emergency Reserves

Some of the best financial planning advice through our high wage earning years includes creating an emergency cash reserve, saving at least three months (some advisors recommend six months) of wages can help offset unexpected expenses.  Unfortunately, when it comes to retirement, many people forget to maintain their emergency cash reserve.  Once you’ve retired, many advisors recommend you keep one year’s worth of cash liquidity for retirement emergencies.

3.  Adequate Savings
The most important part of making sure you have adequate retirement savings is knowing your number.  “Your number” is the amount of money you will need on a monthly or annual basis to support your lifestyle.  Many people make the mistake of not planning for the lifestyle they actually intend to live.  Especially in early retirement, many people tend to travel, provide education or luxuries for their extended family, or add additional expenses not included in their original retirement budgets.  To avoid “mission creep,” look at your retirement savings and budget every few years – even after you retire – so you don’t find yourself running out of money before you run out of breath.  Another ways to help plan for retirement spending includes understanding tiered spending plans for retirement, such as the expectation that you will spend more during your 60’s than in your 90’s. Also, do not forget to ensure adequate savings for your entire retirement, taking into account an above-average life expectancy.

4. Investment Management

Trying to go it alone is often a poor choice for financial management. Even those are in the financial management industry seek outside help since all of us tend to be less objective about ourselves and our own financial situation.  That said, being an active participant in your own financial planning is a smart choice; you get the benefit of professional, objective advice and access to professional investment tools.  A good financial advisor should be able to help you understand various investment strategies and concepts, including risk, diversification; being an active participant in selecting your investment strategies can help ensure your portfolio is managed to your expectations.

5. Estate Planning

The last tip to an effective retirement plan includes creating a sound exit strategy. Financial planning should account for your eventual departure and include burial instructions and funeral services should be undertaken in conjunction with your financial retirement planning. This enables your family to adequately grieve without further complications and obligations for your estate.

Planning for retirement is a process that includes the above five major areas. Completing one or two of these areas still leaves your retirement security and enjoyment in doubt. Contact financial planners that can help with the entire process.