Why is retirement planning important for any age? Why is it important to save for retirement early?
Retirement is one of those things most young people put off until later in life. It is very distant into the future that many do not see the reason to start at the primes of their lives.
While you may not be eligible as a retiree, planning for retirement is crucial for everyone, and the earlier done and accomplished, the better.
Why Is Retirement Planning Important?
Retirement planning refers to the financial strategies of saving, investing, and distributing money to sustain your lifestyle after you leave the workforce. It involves recognizing key income sources, managing expenses, and abiding by a savings program to keep cash flow stable for as long as you live.
While the impacts cannot be felt until you have reached the latter stages of your life, starting early contributes to significant benefits overall to how much of your retirement is cushioned by your actions today.
In addition to the financial side of retirement planning, other factors are considered, such as when retirement would take place, where to live during retirement, what recreational activities will be done, etc.
So, why is retirement planning important? Below are just a few benefits as to why early retirement planning is necessary for everyone, regardless of age and current financial status:
1. Life expectancy is increasing
It has been proven that life expectancy increases yearly thanks to better health and medical care and sustainable lifestyle trends. In some countries, life expectancy has increased from 68 years old in 2000 to 71 as of 2019.
Longer life translates to added opportunities to set aside more money. On the other hand, longer life expectancies also entail a longer retirement, so you will eventually need to save more lest you stretch your savings too thin.
2. Retirement is the best time to do all the things you couldn’t do before
When you retire, the day is yours. No more having to work 8 hours a day, and you find yourself more time on your hands than before. Retirement is an opportune time to try new hobbies, and you wouldn’t want restricted savings and funds to hinder what you can and cannot do.
Planning and saving up a comfortable amount of money can allow retirees the option to travel, for instance, and to collect experiences they couldn’t do so when they were young.
3. Better prepared than not at all
The future is uncertain, and the same goes for your retirement and the time leading up to it.
External factors like inflation and financial hardships can affect how much your savings can cushion your retirement life, but better to have some money saved than none.
4. Work can’t sustain you forever
Eventually, your body begins to act its age, and whether you like it or not, you cannot work forever. Your body will slow down, and tasks that were once easy to do suddenly become more difficult.
Due to the limited time you have to work and that period giving you the steadiest supply of income, it is crucial that some of the money earned while you’re working go into retirement planning and savings funds.
5. You won’t have to rely on others to get by
Being able to care for yourself financially removes the idea of becoming a burden to other people, especially family members. Being financially responsible and planning can alleviate many financial pressures that affect you or your family.
Tips on Retirement Planning by Age
Since you now know why retirement planning is important, below are some tips on retirement savings by age and the measures you need for the most comfortable life possible in your later years.
Starting retirement savings at 50 or below
For those under 50 years old and still working, the biggest tip is to start saving early—and a lot. This is the part of your life where you have the steadiest inflow of income, so saving at every opportunity is possible.
Apart from relying on your salary throughout your career, investing and strategically allocating assets can get you far in your retirement. Investing is also a relatively stable way of earning some money.
Applying for insurance is also good to take the pressure and stress out of obsessively saving throughout your prime years, especially if unforeseen circumstances arise in your future.
Saving for retirement in your 50s (Between 51 to 65 Years Old)
At this age bracket, saving should still be your top priority. Taking care of your health is also something to be considered, more so because illnesses tend to develop by then.
At this age, planning for your retirement income becomes more important. Consulting financial advisors about the average income, you’ll need to get by should be top of mind. Consultants may suggest opting for an annuity for a steady income.
Retirement planning in your 60s (Above 65 Years Old)
When you’ve retired, the goal is to ensure your savings last. Don’t just spend most of your money because of your newfound freedom. Establishing a spending plan to ration your savings is now key to success.
Prepare for the long term, too, not just for the honeymoon period when you travel and tick off your bucket list. Stocks you’ve bought can add passive income, but just because you’ve achieved retirement comfort does not mean you should be complacent.
Why is it important to save and invest for retirement?
Though many of us still think retirement is very much ahead in our future, planning for it can save time and resources in the long run. If accommodated and done early on in life, you can rest easy knowing you can retire with health and wealth.
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.