As you plan your future, your retirement plan becomes a significant part of determining the next stage of your life after employment. It takes careful financial and health planning for your retirement plan to become a success. People have different reasons for making a retirement plan, and the following are some of the most common:
Contents
1. The Average Life Expectancy Continues to Increase
The average lifespan continues to increase, and the average life expectancy of males increased from 71.7 years in 1990 to 76 years in 2008 and is expected to reach 79.8 years in 2035. On the other hand, females reached 81 years in 1990 and are expected to reach 84.9 years in 2035. This is according to the 2010 Annual Report on Health and Vital Statistics by the Center for Disease Control. As people live longer, retirement planning has become essential to your life after employment.
2. People Plan to Retire Later Than Before
In 1990, the average retirement age in the U.S. was 63; it is expected to be 66 by 2035, according to the Social Security Administration. The increase in average life expectancy and decrease in years employed after obtaining the first job encourages people to work longer. It also allows them to plan for a more extended retirement before they can stop working. Speak to a financial advisor or get retirement planning quotes from reliable financial planning services to set a plan for your retirement goals.
4. People Don’t Plan Early Enough
According to the Bureau of Labor Statistics, 55% of people over 65 were still working in 2008. The percentage has been observed to have increased from 5% in 1990 could reach 15.2% in 2035. However, much higher rates would be expected if people started their retirement plans earlier. Don’t wait until it is too late to start planning your retirement. Early planning provides you with the opportunity to achieve your goals as per the set timeline.
5. People Need an Income During Retirement
According to the Department of Labor, “about half (51%) of workers have less than $30,000 in total savings and investments when they retire. This is not enough to live on, let alone cover long-term health care expenditures.” As many people don’t plan for retirement in their 30s, they plan for it in their 60s and 70s. “The majority of workers wait until they are older than 65 to start a retirement plan,” according to the Department of Labor.
6. Your Future May Face More Financial Obstacles
Cases like changing health care costs, reduced income, increased expenses, and supporting a spouse or children could make your future more expensive. When this happens, you might find it challenging to live a comfortable life. Also, your pension might not be enough to cover all costs; hence, you might have to work longer or get an alternative source of income. Through early planning, you may adequately budget for the future, including miscellaneous expenses.
7. Relying on Social Security or a Pension Is Risky
The Mayo clinic estimated that a male would pay $208,000 on medical expenses over the average life expectancy of 76, and that can increase to $1.4 million for a female who lives to 84. Looking at the average years worked after obtaining your first job, 37 is realistic for most people. If you can save an average of 6% of your salary per year in retirement savings like 401k plans or IRAs, you can expect an income averaging about $1300 per month.
8. It’s Unfair To Depend Upon Your Family
Most parents expect their children to care for them after they retire. While it might seem unavoidable and a family concern, it is crucial to consider the mpact such decisions might have on your children. These children will grow into adults and face financial responsibilities; hence, total dependence on them will be strenuous.
The best thing to do is plan for a successful retirement where you can depend on your pension and other incomes. It will be less stressful for you and your family, and you may also help where financially necessary.
Conclusion
A financial emergency or natural disaster can cause significant stress for a person and their family. If the situation is not handled wisely, it can leave them facing harsh financial consequences.
Early savings, investment, and planning will allow you to ensure a more comfortable future after you retire from employment.
