Why is Retirement Planning Given So Much Importance?

As you grow older, the thought of retirement can be both comforting and frightening, since you have the free time to do what you want, but also the worry of being dependent on someone other than yourself. An effective and well-planned financial strategy for retirement is the smarter way of securing comfort, independence and safety in old age.

The last thing that anyone wants is to be a burden on someone else, especially in terms of finances, or to end up in an assisted living or nursing home during their “second childhood”!

What is the Importance of Retirement Planning?

Retirement plans help you meet your personal and financial goals as well as maintain the lifestyle you are comfortable with, even after you have retired. It’s essential to be prepared for the day when you can no longer work and support yourself with an income, even if that day is far in the future.

Let’s look at some of the main reasons why retirement planning is important, and basic retirement planning advice from the experts:

Generating a Source of Income – While you may have a pension plan, Medicare or social security benefits to replace part of your income, these are rarely enough for most retirees to live on.

Investing money in retirement savings vehicles like 401Ks and IRAs, as well as life insurance plans, annuities, securities and other financial tools, can help generate an additional income source after you retire from work.

Comfortable Standard of Living – For most retirees, quality of life after retirement is the number-one priority on their list. You may have dreams you’d like to fulfil, like travelling the world, buying a vacation home or simply landscaping your garden so it looks magazine-ready.

All of these indulgences need money, so you need a smart financial plan that lets you do exactly what you want when your time is your own.

Resources That Outlive You – It’s common knowledge that people are living longer, mainly due to medical and technological advances in healthcare, nutrition, etc. You need to be prepared for the possibility of living into your 80s and 90s, or even longer.

Plan your retirement fund as if you were to live to a hundred, so you’re financially covered in case you do and can leave behind an inheritance if you don’t!

Coverage for Long-Term Care – As you grow older, chances are that you will need some form of managed health care and/or assistance, whether at home or at an outside facility. With Medicare, you receive financial assistance for skilled care at a nursing facility or at home, only if it’s medically necessary.

Long-term care costs are extremely high, so your retirement plan needs to include long-term care insurance.

When you plan your investments for retirement, remember to factor in adequate insurance (both life insurance and long-term care insurance). This adds an element of security and protects your assets, which is what lends an edge to your retirement plan!