Before we start discussing how to plan for a successful retirement, we need to understand what is retirement planning and why is it important?
Retirement planning refers to the allocation of savings for retirement and it is one of the most important life event. The goal of retirement planning is to achieve financial independence and the reason why you need to save for retirement is because it is your life.
All of us would like to retire comfortably but the complexity involved in achieving our retirement goals successfully requires us to make a sensible planning and years of persistence. However, we believe that instead of feeling the pinch post-retirement, it’s sensible to start saving early. What you just need to do is to start with an attainable saving, plan your investments and with a long-term commitment.
Reasons for Retirement Planning
1. To spend retirement in your way
The way you want to spend your retirement totally depend upon the amount of money you have saved and invested. Everybody has a goal in life and retirement is the best time to fulfil all your goals and transform your dream into reality. But for this you have to be financially sound, otherwise, the problem of fulfilling your basic needs like feeding or clothing etc will daunt you in your old days as opposed to where to go for a vacation with your family.
2. To plan for your kids
Another very important reason why you need to save for retirement is for your kids. Most of the people have to undergo financial difficulties just because their parents had not properly planned for their retirement. Fulfilling their heavy medical expenses and other needs along with personal family need is really very difficult in today’s era of high inflation.
Also Read: The Uninvited Guest – Inflation
Hence, it is advisable to start with your retirement savings as early as you are 20 years old and single. The retirees pose a huge burden on their family who had not planned and saved for their retirement. Moreover, as a parent, it is your responsibility to protect and plan your children’s career rather than causing them to face your own financial difficulties.
3. To take care of your health
There’s always a health issue associated with growing age. There may be a situation where you cannot work any longer and the savings for retirement will help to ensure that you are well cared of. So the big question is that can you afford the cost of long-term care since it can be very expensive and is included in the cost of your retirement. Hence do start with your savings.
You can also check Personal Financial Planning course if you are planning for your pension.
4. To avoid work pressure post-retirement
Do you want to keep working after your retirement? If the answer is no, then you should start with your savings. The people who are unprepared for retirement often have to keep working to fulfill their family’s need throughout life. It is very unlikely that you will generate income forever, hence, savings play an important role.
5. To avoid becoming over-dependent on social security benefits
Most of the people will answer that they have their social security benefits to fulfill their post-retirement need. But let me tell you that it is not enough to cover all your retirement living expenses. Many financial advisors believe that you need around 70-75% of your income to live your life comfortably after retirement. However in most cases it is seen that a person receives just 40-45% from these benefits. Hence, you need to start with your savings since you cannot totally rely on social security benefits to survive.
To know more about the importance of Retirement Planning you can watch the video below:
If you are willing to retire early and share the same thinking with the character of Hrithik Roshan in movie Zindagi Na Milegi Dobara, so start saving early. The earlier you start, more likely that you will be on track with meeting your goals. However, if you start late, it may happen that you have to sacrifice or adjust yourself with your pre-retirement and retirement lifestyle. Moreover, the amount that you need to save and add each period will depend upon how early you start saving.
Starting with your retirement planning in the twenties may seem too early for your retirement. But starting early really makes it easier to reach your goal. Moreover starting early will allow you to develop good retirement savings and planning habits and give you more time to rectify any mistake and to identify any shortfall in achieving your goal.
The retirement plans should be designed and implemented as soon as you start working. It’s always better to seek the help of an experienced retirement planning professional if you are not knowledgeable enough to make your own suitable decisions. These financial planners will consider various factors to perform retirement assessment which includes your income, expenses, age, desired retirement lifestyle and so on. Hence, employ the sweat of your golden years to provide a shade in your old days so that you depart the world with the feeling of satisfaction and completeness.