Quiz 4: Risk Management Through Retirement Planning
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Notion of retirement refers to the method of understanding the concept of retirement, a widely used phrase. Retirement refers to a phase of life when an individual completely stops working to earn financial benefit. It involves permanently leaving any sort of work be it as an employment under someone or self employment. During the time period before retirement, an individual earns and invests in a suitable manner so as to get financial support during the retirement period. Traditionally a retirement age is considered from 65 years in most parts of the world. During this phase, financial benefits are provided to a retired employee by government, employers through their contribution during the employment period and also in the form of savings made by the employee himself during his income period for the purpose of securing its future and continue with the similar standard of living in the retired life. Thus, retirement can be considered as a predetermined stage that arrives in the life of each individual and each of them is required to be prepared for it
Retirement refers to the life stage where individual permanently stops working and depends upon accumulated funds and assets for livelihood. Retirement risk are however present during retirement which arise due to shortage of financial resources. In order to manage such risks, retiree is required to make adequate contribution to the employer's benefit plan. Not only this, the employee in order to manage such risk to some extent should make greater savings during his earning period. For the purpose of same, investments are to be made in tax saving investments that provides greater returns. For this, alternative approaches are available for the employees that can be invested in either employer's designed plan or even separately in any other investment plan outside employer's stated designs. This retirement plan selection and different savings vehicles would assist in earning beyond basic income requirement so that adequate and sufficient fund is available to continue with current living standards and meet any urgent requirement.