Retirement planning is necessary unless you want to be a financial burden on your loved ones. We are living in a time of increased longevity and high costs associated with it due to rising food prices and health care costs. On top of that, we are faced with increasing inflation rates coupled with taxes leaving us vulnerable to poverty once we retire unless we do retirement planning on time. The earlier you start planning for your retirement the better off you will be. Retirement planning will help you start investing into your retirement early and thus insure yourself against unexpected events in life such as unexpected disease or depletion of social security fund as envisioned in 2037.
Below listed are top five reasons for why you should plan for your retirement:
1. Increased longevity and high costs associated with it
Statistics are showing that longevity is increasing as well as costs associated with it. We are faced with rising food and health care costs on a daily basis. These costs can amount to a lot of money in twenty years especially if we count in taxes and increasing inflation rates. Now, think about how much the food may cost in twenty years from now when you may want to retire especially counting in inflation rates and taxes. This alone is a very good reason for you to start planning for your retirement on time. Not to mention that some seniors are outliving their savings.
2. Rising health care costs
Health care costs are rising much more rapidly than general inflation. Thus, you will be faced with increased health care costs when you retire as you will no longer be entitled to health coverage as when you were working. Thus, you will have to purchase your own health coverage that is likely to be very costly when you get old.
3. Rising inflation costs
We are faced with increasing inflation rates due to stagnating economy and a weakened dollar value. Thus, inflation represents a big risk for current retirees. In fact, it presents even bigger risk for future retirees as the rate of inflation in the future could be even worse especially for expenditures such as food and health care that we can not deal without. In this light, planning for your retirement and investing into your retirement fund on time becomes even more important as your money may lose value if it does not grow faster than inflation.
3. The earlier you start planning for your retirement the better off you will be
The earlier you start planning for your retirement the better off you will be as your money will have more time to grow. Not only will you have to save less amount of money, but you will end up saving more than if you start later and save more.
4. Unexpected events in life
We live in an insecure time where only planning can give us a feeling of stability and control over events that happen to us in life. Every day we hear stories of our friends or neighbors being laid off. On top of that, we never know when we may have a medical emergency in our family. Retirement planning will help you start investing into your retirement early and thus insure yourself against unexpected events in life. Thus, if you lose your job due to economy’s decline in let’s say your forties; you will still have a significant amount of money accrued assuming you had started saving early at age 20.
5. Social security is no longer secure
The future of social security seems to be uncertain under the current weight of the recession. It is expected that soon we will be faced with a situation where social security will start paying out more in benefits than it collects in taxes in 2016. Thus, the assumption is that the social security fund will be depleted by 2037. Thus, careful and detailed planning for your retirement on time is crucial in today’s times unless you want to have a miserable retirement.