What are the benefits of retirement planning? Is retirement planning something that needs to be taken seriously or should one just take things at their own pace with no worries? Today we shall explore an interesting topic that many people love to avoid until it is rather too late. As much as this article will not cover how you should go about retirement planning, it will show you what you stand to gain by planning for your retirement years accordingly, and within a reasonable timeframe. Read on to find out more.
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The present economic landscape
More than 50% of Americans believe that is close to impossible to plan for expenses that they will incur in retirement. Even worse, about 63% of US citizens are afraid of running out of money during their retirement years, more than they are afraid of dying.
Fortunately, enough, there are some retirees who have already figured out how to live on their retirement savings comfortably. This has only been possible for them due to the meticulous planning that has gone into choosing their retirement investments, all meant to ensure that they do not run out of funds when they need them the most.
Today’s economic landscape is quite different from about two decades ago. The rising inflation has proven to be quite a menace, with many retirees complaining that their retirement savings are getting eaten into faster than they had imagined. Beyond that, the medical costs for the seniors in their retirement years have shot up quite significantly. A couple retiring this year is expected to spend about $300,000 on their healthcare needs, during their retirement years. In 2002, the projected healthcare cost for such a couple was $200,000.
Without even getting into other particulars, I bet you can also agree that the economic landscape has changed. If you, however, come up with a solid retirement plan, you can reap the benefits discussed below.
The benefits of retirement planning
Peace of mind
Most of today’s American working-class citizens report anxiety arising from financial stress. About 60% of that group are all more worried about the financial troubles they are likely to run into in the future, as opposed to their current money-related problems.
Financial stress is responsible for the loss of productivity, good health, and even quality sleep. With a solid and reliable financial plan, however, one can avoid all of this trouble.
A retirement plan can be the sole source of the positive emotional energy that you need to focus on the things that matter most to you.
You begin making smarter decisions
Most of the financial decisions that we make today have a long-term impact on the future. Not many people think about the 10 to the 20-year impact of purchasing a new home or car. Often, such decisions are made impulsively, when the bank account balance is looking good.
Upon creating a retirement plan, however, you will begin to ask yourself questions like:
- How can I reduce my taxes?
- Is the boat a necessary purchase?
- Should I take social security?
- How can I increase my employer benefits?
- Does changing my job make financial sense?
The more of such questions you are able to critically think about with your retirement years in mind, the more the smarter decisions you are likely to make.
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Creating a unified vision for retirement
It is highly likely that you and your significant other have very different ideas about what your retirement years should be like. If you step into your retirement years without defining a unified vision of how you will spend the retirement savings, then you may end up spending the rest of your life dissatisfied.
Planning for the retirement years will force you to have uncomfortable conversations, as you aim to define how your lifestyle will be like.
Planning for your healthcare expenses
More than 55% of women and about 47% of men need long-term care as they head into their retirement years. If you purchase a long-term care policy earlier in life, then you can pay lower premiums and still get the deserved benefits. Paying the premiums in your 60s, however, will cost you about 8% more than it would have cost you, had you decided to start paying the premiums before hitting your 50s.
A retirement plan will help you put things into perspective, and decide how you will meet all your healthcare costs, including the long-term care costs.
Determine how much money you need to retire
It would be far from wise to retire without determining how much money you need to sail through your retirement years comfortably. This can end up being the perfect recipe for financial woes, and stressful life.
If you do not have a financial background, you may need to contact a certified financial planner to walk you through the planning phase. He or she can help you determine:
- The best assets to hold and how much money to save
- The income streams to rely on after retirement
- Your projected living expenses.
- Miscellaneous expenses to prepare for.
The above-listed elements are very crucial in the determination of the amount of money that you need to have before you hand in that resignation letter or prepare your retirement speech. The earlier you meet a financial planner to curate a personal retirement plan, the better. Doing so will give you enough time to look into the options available to you, as well as what you can do to maximize your investment income.
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That will be all for this article in which we have looked at what the benefits of retirement planning are. I hope you found it beneficial and that it will spark up the interest to create your very own retirement plan. Age does not matter when it comes to planning for your retirement years. You can automate your investment plan, and wait to reap the benefits later on in life. What are you waiting for? Take out your pen and paper and start planning.
I wish you well,
Eric, Investor and Team Member at Gold Retired!
Alice Carroll says
Thanks for explaining that a retirement planning coach can help me determine which assets to hold onto as investments. I’d like to meet one someday because I’d like to have a lot of money stocked up for a business or a home later in life. Making sure that I also have some left for my retirement would be great.
First of all, thank you for your comment! Appreciate that more than you might think.
You are thinking absolutely right, you deserve to have money stocked up and have a good retirement, hopefully this site can help you on the right path!
Thank you again,