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Retirement Planning: Why Plan For Retirement?

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https://www.investopedia.com/university/retirement/retirement1.asp

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Retirement Planning: Why Plan For Retirement?
Before we begin discussing how to plan a successful retirement, it's important to understand why people need to take retirement into their own hands in the first place. This may seem like a trivial question, but you might be surprised to learn that the key components of retirement planning run contrary to popular belief about the best way to save for the future.

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Uncertainty of Social Security and Pension Benefits

  • The aging population is causing fewer contributors.
  • More people are retiring due to increased longevity.
  • Corporate col...

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Unforeseen Medical Expenses

Old age typically brings medical problems and increased healthcare expenses.

Living out your retirement years in comfort while also covering your medical expenses may turn out to be a ...

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Estate Planning

Without a well-planned retirement nest egg, you may be forced to liquidate your assets in order to cover your expenses during your retirement years.

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The Flexibility to Deal with Changes

Unforeseen illnesses, the financial needs of your dependents, and the uncertainty of Social Security and pension systems are but a few of the factors at pl...

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SIMILAR ARTICLES & IDEAS:

Build a team

Growing older without a spouse or adult children means you'll need to build support who can help with your finances, make medical decisions and prevent you from becoming isolated as you grow ol...

Create an income safety net

Many singles don't have a strong enough backup plan to cover the costs of a major illness or other problems.

Ensure you have enough cash on hand to cover emergencies. For singles, the aim is between nine and twelve months of living expenses in a savings account. As you near retirement, consider bulking up to at least two years of living expenses.

Long-term disability policies

Group long-term disability policies offered by employers typically replace up to 60% of your income.

To ensure you have enough coverage, aim to bring your total coverage up to 80% o 90% of your take-home pay, including bonuses and commissions.

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Early Mistakes, Late Start & Future Hurdles.

Savings and investments should be part of a monthly budget even when young or just starting a career.

You cannot save enough if you are waiting until your late 30's before...

Myth vs. Reality in Retirement Planning

  • I’m not that old:  It’s not about NOW but saving for your old days when you can no longer work full time. 
  • I’ll wait for a lump sum is just an excuse to postpone planning or procrastinate.
  • Assumed Family/External Support: It’s better to be prepared for eventualities and have contingency funds in hand.
  • Financial Requirements Decrease: Medical costs increase with age. Inflation and other factors might also come into play.
  • I will not live that long or I won’t retire: People tend to live longer, but they will suffer from medical ailments.

Retirement Goals

To have a secure and financially independent retired life during your golden years with regular post retirement income, a corpus of savings/investments and a safe shelter or home.

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Why you should plan to plan ahead for retirement.

Why you should plan to plan ahead for retirement.
  • Getting stuck in the savings mindset. Saving should be formed as a habit. The amount saved can be increased over time.
  • Medical emergencies. With increasing age comes...