What will determine your life during the golden years of retirement is how you approach your retirement and the investment choices you make today and at every moment. If you adopt a prudent approach and take wise investment decisions, you would be able to safeguard your family’s future and nurture a better retired life. Planning for your retirement especially if you are the sole bread earner of the family is one of the most important financial responsibilities that you have. However, in today’s era most people spend their entire monthly income and do not understand why they should save for their distant future from an early age.
Hence for your understanding, we have listed down reasons why it is imperative for every individual to plan for their retirement, irrespective of their age.
- To cover daily living expenses
Have you wondered what would happen if your monthly pay checks would stop coming in? All of us have to bear the necessary living expenses in our households and the absence of our monthly income could become a night mare for most of us. It would create huge financial liabilities and we would become a burden on our loved ones. Retirement planning is working towards avoiding this night mare from become a reality in the golden years of life. Not many people get pensions or gratuities post retirement and even for those who do receive them; the amount is generally not big enough to cover all of their expenses. By planning and building a sizeable retirement corpus, you can ensure that your family’s standard of living is not compromised post retirement.
- To cover medical expenditure
As one’s age progresses, the number of health issues and emergencies also increase. And as you might be aware, medical expenses bear the potential to create a huge hole in your pocket. Mind you, medical expenses may not always be related to you. It could also be for some health problems that your spouse or children may face. In fact, these days even dental treatments can cost you a small fortune. Mediclaims or health insurance policies may sometimes not cover all your medical expenses. In such a scenario, you would be forced to pay for these medical bills from your own pocket. Therefore your retirement corpus must be large enough to cover your and your family’s medical expenditure to avoid a financial crunch in the later years of life.
- To fight inflation
Inflation refers to the rise in the prices of goods and services. And as some of you may be aware, it eats into our earned savings and reduces the purchasing power of our hard earned money. You see, prices have been on a rise constantly since the last few decades, and will continue to be on a rise until you reach the retirement age. This means that you would have to pay more for everything in the future. From grocery to travel to accommodation, it is going to cost you relatively more in the future. Without a sound retirement plan, that aims at establishing an adequate retirement corpus keeping in mind inflation, life expectancy, rate of return and so on, it would be impossible for you to achieve all your retirement goals.
- To meet your retirement goals
Retirement goals are the objectives that you wish to achieve in your retirement years. These could be travelling and exploring new places or taking up hobbies that you have always wanted to pursue. For some people it could also be concentrating on fitness and improving their health. You might also want to give your loved ones some gifts, money, artifacts etc. in your retirement years as a token of appreciation and togetherness. However, if you do not plan and save for all these retirement goals in your working life, they cannot become a reality in your golden years.
- To deal with uncertainties
Life is quite unpredictable and uncertain. It can sometimes throw us in adverse situations and circumstances which we may not have expected. Some situations have the power to create a financial as well as emotional turmoil in your life such as natural calamities, loss of loved ones, financial difficulties in the life of family members and so on. Having a sufficient corpus to take care of such contingent events can always come to your rescue. Thus while you approach retirement, it is imperative that you have a sufficient contingency fund, so that the intermediate period of turbulence and turmoil can be managed better and not hinder your long-term goal of living a blissful retired life.