How To Boost Retirement Returns In The Digital Era? - Retirement Planning

The digital era has brought significant changes to various aspects of our lives. Right from online shopping to financial planning, the many online avenues, tools, platforms, and services have made life convenient. Digital financial planning can be a boon if used correctly. The Internet has brought access to free, topical, and simplified information. It can enable you to educate yourself about different domains of personal finance, including retirement planning. You can utilize a wealth of resources, monitor your retirement savings, track investment performance, join online forums, and manage multiple retirement accounts while on the go, at home, or in between meetings from your office.

While you can always hire a financial advisor to manage your money and help you with financial planning, digital tools, and platforms can enable you to take charge of quite a few things on your own. This article will explore the various ways in which you can benefit from retirement planning in the digital-age.

How can you benefit from retirement planning in the digital era?

With the right and timely use of digital tools, you can reach your retirement planning goals faster, enjoy better clarity along the way, monitor your progress, and make informed choices that stand the test of time.

Here are 5 ways you can benefit from using technology while planning for retirement:

1. You can take online courses to educate yourself

For years, people lacked access to adequate knowledge about personal finance. Personal finance is not taught in school, but a skill you need to learn nevertheless. Basic principles of financial planning, such as saving, investing, budgeting, and debt control, can go a long way in ensuring your financial security. Online courses can help you learn about these in detail at your comfort.

Online courses are affordable and can be easily taken up by anyone, irrespective of education or professional background. You can access courses at your own pace and fit your learning around your schedule. This can be particularly advantageous for individuals who have busy lives or work full-time. Additionally, you save on costs. There are many free courses on the Internet. You can also choose paid courses as per your budget. Online courses eliminate the costs associated with commuting, accommodation, and other expenses also. This makes them a viable option for those on a budget or seeking to maximize their learning opportunities within their means.

Online courses are usually developed and taught by industry experts or financial professionals. They bring you an opportunity to leverage their knowledge and experience so you can get accurate and up-to-date information. Many online courses provide lifetime access to course materials, allowing you to revisit the content whenever you need a refresher. Moreover, you engage with fellow learners through discussion boards or online forums and learn more. These digital financial planning courses may also have exercises and case studies that can help you practice what you learn and understand the content’s employability.

Apart from courses, you can also use other formats like articles, videos, podcasts, etc. This makes learning all the more fun, interesting, and accessible.

2. You may use calculators to set financial goals

Digital tools for retirement planning, such as financial calculators, are designed to perform complex calculations, such as determining investment returns over a period, calculating inflation, ascertaining retirement needs, etc. These calculators can accurately and quickly provide you with an estimate. They eliminate human error that may occur when performing calculations manually, ensuring the accuracy of your financial projections.

Financial calculators can help you set realistic financial goals. Whether it is saving for a down payment on a house, funding your children’s education, or building a retirement fund, these online tools can help you determine the required contributions, time frames, and investment strategies to reach your goals. Financial calculators are quick and can save you significant time by automating complex calculations. Moreover, these tools can help you compare different options. You can enter various permutations and combinations to compare other options and analyze their impact on your finances. For example, you can explore how an investment instrument with a return of 10% can generate a yield over a period of 10 years versus 20 years. This can help you make better-informed decisions and understand the potential outcomes of your choices.

Financial calculators can also offer you more confidence. They can empower you to take control of your money with a clearer vision. They can reduce stress and anxiety by offering you accurate figures. Many tools provide charts, graphs, or tables that can act as visual aids and help you visualize your financial data, making it easier to interpret complex information.

3. Use financial trackers, such as apps, excel sheets, and more

Once you have set your goals, you would also want to know how your plans are faring over time. Financial trackers are digital tools for retirement planning that can help you to do this by monitoring your expenses, incomes, investments, savings, etc., in a systematic and organized manner. Trackers like apps and Excel sheets allow you to log your income and expenses to gain a clear picture of where your money is going. This helps you identify areas where you can reduce spending, make adjustments to your budget, and improve your overall financial management. They can also be used to understand what percentage of your income is being saved and invested for your future goals, such as retirement. You can set milestones, track savings contributions, and measure your success over time.

You can sync your apps with your bank accounts, credit cards, and others to get up-to-date information about your balances, transactions, and account activity. Tracking your finances with these apps or even Excel sheets can increase your financial awareness. By regularly reviewing your income, expenses, and savings, you develop a better understanding of your financial habits, patterns, and areas where you can make improvements. This awareness empowers you to make informed financial decisions and take control of your money. You also enjoy the increased convenience of accessing your financial information anytime, anywhere, through your smartphone or other devices.

Regularly updating and reviewing your financial tracker ensures that you have accurate and relevant information to guide your financial decisions.

4. Automate your spending, savings, and investments

Automating your spending, savings, and investments allows you to concentrate on your long-term financial goals and establish consistency. Developing the right financial habits can be hard. Lack of time, interest, or busy schedules can come in the way of consistency. Automation helps to deal with all of this. You can set up automatic transfers, payments, savings contributions, investments, etc., and build financial discipline. It reduces the chances of forgetting or procrastinating important financial tasks and puts your financial considerations first.

Automation can also be a time-saving benefit. It frees up time for other activities and allows you to focus on higher-value financial decisions and goals. All you need to do is set up your payments or contributions once. Automated bill payments also help you save money. Automation also ensures that your recurring bills, such as rent, utilities, insurance premiums, or loan payments are paid on time. This helps you avoid late payment fees, penalties, or any negative impact on your credit score.

Lastly, automation helps you stick to your predetermined investment plan and contribute consistently, irrespective of external stimuli. This way, you do not make impulsive investment choices based on short-term market movements and follow a long-term perspective for maximizing returns in retirement. This gives you peace of mind and avoids hasty mistakes due to emotional triggers.

5. Consider using a Robo-advisor for financial advice

A Robo-advisor is a financial planning tool that offers basic financial and investment advice based on algorithms. Robo-advisors operate through online platforms or mobile apps and can advise you on a range of financial concerns. In most cases, Robo-advisors ask for your basic financial information and goals through questionnaires. After that, they asses your data and generate general advice based on data-driven algorithms.

Robo-advisors can help you with a diverse list of things. For instance, they can provide personalized investment recommendations as per your goals, determine an appropriate asset allocation based on your risk profile, monitor your portfolio regularly and automatically rebalance it when necessary, implement tax-efficient investment strategies, provide regular reports and updates, and more. They also generally have lower fees compared to traditional human financial advisors, making them accessible to more people. Further, Robo-advisors can offer you real-time information about your investments, track progress toward your financial goals, and view detailed reports on your portfolio’s performance.

Things to keep in mind when embracing the digital era of financial planning

As you embrace the changing landscape of retirement planning, it is important for you also to exercise some caution. Digital financial planning can be beneficial, but it is important to keep the following things in mind:

1. Be mindful of potential data breaches and other risks

While technology and automation can offer convenience and efficiency, it is important to exercise caution. Be mindful of the risks involved, such as potential data breaches or technical glitches. Choose reputable platforms, employ strong security measures, and stay vigilant about protecting your personal and financial information. Read the reviews and feedback of an app before downloading and uploading any critical information. Take recommendations from trusted sources. Use your bank’s official apps to carry out your transactions whenever possible.

2. Stay away from fraudulent or unreliable online financial tools

Before using any financial tool or platform, conduct thorough research. Verify that the tool is from a reputable provider, licensed, and regulated by relevant authorities. You can look for secure website connections (HTTPS), two-factor authentication options, etc. It is also important to look out for warning signs like exaggerated or unrealistic claims, guaranteed high returns, etc.

3. Stick to user-friendly platforms

When selecting a financial tracker or other digital tools for retirement planning, pick something that is user-friendly. This will make it easy for you to use and rely on the instrument. Check the platform’s usability, make sure you can navigate its interface without hassles, and ensure compatibility with your devices. You must also check whether it integrates seamlessly with your bank accounts or cards.

4. Choose tools based on your specific financial needs

Consider your specific needs and goals when selecting a tool. For example, choose a tool that provides retirement-specific tracking and projections if retirement planning is your priority. If your goal is to create a budget in retirement, use an expense tracking tool. It is important to tailor your selection to align with your unique financial situation and objectives. This will ensure that you get the most out of the tool and are able to achieve your goals.

5. Do not neglect traditional investment practices

Despite the advancements in digital tools and platforms, traditional financial principles and strategies are still relevant. Concepts like budgeting, saving, investing for the long term, tax planning, and managing debt are still fundamental for sound financial planning. For instance, spreading your investments across different asset classes, sectors, and geographic regions through diversification is crucial to managing risk. This can help mitigate the impact of market volatility on your portfolio.

Remember to use technology as a tool to support and enhance existing financial principles rather than replacing them entirely.

To conclude

Technology and retirement planning go hand in hand in today’s times. However, remember that while digital tools and technology can be valuable aids, they should be used carefully. The digital era has undoubtedly improved access to retirement planning tools and information, but it is important to note that traditional financial principles and strategies still apply. When in doubt, seeking advice from a qualified financial professional can certainly be the best course of action.

Use the free advisor match service to find a financial advisor who can help you with digital financial planning. Answer a few simple questions about your financial needs, our matching tool can connect you with 1-3 advisors who are best suited to meet your financial requirements.