What are the 8 reasons why it is important to plan for retirement? I’ll show you!
The issue of pensions has been a priority for many years, so you are sure to have a useful basic knowledge on the subject. Regardless, unfortunately, there are very few who have at least broadly planned their own retirement years. Let’s look at the 8 reasons why it’s important to plan for retirement.
1. Life expectancy is getting longer, and at the same time you are expected to spend more and more time in retirement
Rising living standards, health awareness, and technological advances in medicine have significantly pushed life expectancy. Think about it, when you were a kid and someone in your environment was referring to age 50, you were thinking of grandmothers. Now, we’re not talking about not sitting grandmas and grandpas sitting quietly, but about a vibrant active age group who may even raising a child.
This also means for you that you are facing a period that will last for 25-30 years at best.
2. You can say you don’t even live till that time
Yes, it’s in the deck. An illness or an accident can very easily make your retirement plan unnecessary.
If you have ever observed an age tree, you could see that except some developing African countries although the population is declining, you may see significant loss around the age of 80.
Statistically, if you’re past 30, you’ll have a good chance of surviving till your retirement, so the question isn’t necessarily what happens if you don’t live, but the good question is what happens if you live.
3. You cannot rely on a state pension
Many people grew up seeing a loved one after a decent working life living on a state pension. There was several cases, that quite well. Partly because of this, many people have the idea that they deserve it, after all, they have paid their pension contributions regularly.
Of course, the state will give you a pension, even if they say that you will not receive anything. The only question now is how much.
Although retirees are also voters, they are no longer active contributors to the GDP produced, so raising pensions typically lags far behind current inflation levels.
So you may retire with a high pension, but this will be grinded over time by inflation.
4. Rising health care costs
The overload of the public health system (even if your country have one), the waiting lists, I don’t think I should present to anyone. As we age, it may become increasingly necessary for anyone to use health services.
The pension also needs to be designed to allow for either private care (which shortens the waiting list by half a year) or even the change of glasses. Apart from funding private care, it should also be overlooked that in old age it is not uncommon for someone to take multiple medications on a regular basis.
You can alleviate this burden with a health fund and health insurance.
5. You don’t work forever
Now that you are young and vibrant, you can very easily believe that since this has always been the case, it will always remain so. You will never get tired of work, you will always be able to cope in addition to retirement, or you will work instead of retirement.
That doesn’t mean you shouldn’t plan your retirement, because if you don’t plan, it’s sure that you’re going to work instead of retiring. It just may not be to your delight.
6. You can say you don’t have the money to set aside for your retirement
In fact, there are life situations where something derails and you have to climb out of the pit. These, in turn, are rare compared to waiting for the ideal “then when I have money for everything” period. The past and the future hold exactly the same difficulties and challenges as the present. If you do nothing, I guarantee you will pay the price for this at the latest as a retiree.
7. It is never too early to plan for retirement
If the retirement period is still very far away, it just means that you can take advantage of the effect of compound interest much more actively. If you start your retirement plan as a twenty-year-old, you can practically put together the same capital from pennies that a fifty-year-old has to reach very deep into his pocket.
You get a little inconvenience at a young age, and you don’t have such a deep pocket as an old man.
As you can see, here, under the same conditions, all three competitors invest the same amount. Merely playing with time slots allows you to gain a serious advantage even if you don’t deposit for decades, just in the beginning.
8. It is not fair to rely only on your children
The family is a unit of family members helping each other.
There are places, it is also enshrined in law that, like child support, a child may be required to have parental support if the elderly parent is unable to pay for his/her live.
Whether it’s mandatory or just asking for family help, you would take it from your grandson.
How would you feel if you had to do this just to have enough retirement for your simple livelihood and survival?
- In what form do you take care of your own pension?
- How do you plan your own retirement life?
- What determines the amount set aside for you for retirement purposes?
Feel free to contact me with your questions related to pension planning.