Introduction: Preparation for retirement should not be considered when the age of 55 years is knocking. It is critical to have a retirement plan before that time.
Retirement planning is having future income goals, determining the future income source, and having an estimate of future expenses. Besides, it is important to have proper management of assets and a saving plan.
Most people base their retirement plan on social security funds, which might not be adequate. You can’t compare the money that you have saved with money that is being controlled by others.
Essay on Retirement Planning
The best time to save is in your young years. This will require that you remain disciplined and work with what you can afford. Living an extravagant life might be regretful later.
The amount of savings you make should increase as you grow in age, experience, and get exposed to more opportunities. This paper will highlight several things about a retirement plan.
Components of retirement planning
Retirement planning comes in two phases. They are personal and financial planning. Both of them are critical because they will determine how you will be after retirement.
Personal retirement planning involves how you want to spend the days of your old age. This is where one makes choices depending on their interests in life.
You can choose to focus on your talent, go back to school, earn new skills or start a business. Considering the kind of lifestyle you want is a key factor in planning for your retirement.
This is because your choices will navigate your financial planning, especially in making the goals achievable.
Financial planning involves determining whether you will afford the kind of lifestyle you desire after retirement. You should consider your income and its source not to anticipate what you won’t afford.
To have a realistic financial plan, it is good to compare your income and expenses. This will help you take care of shortfalls and surpluses. Additionally, compare the income options that you have and also develop an action plan.
Benefits of Retirement Plan
The benefits of retirement planning are diverse. They are financial, psychological, and personal. Here are some of them.
Many tax benefits come with proper retirement planning. A good example is a money you save will not experience massive taxation. This means that the amount of money you have for your retirement plan does not owe any taxes.
Moreover, retirement money has quicker growth compared to the money that is taxed annually.
Enhancement of financial security
This is another main benefit of a retirement plan. This is more so in helping you avoid a lifestyle clash, especially in basic needs and payment of bills. Proper planning will strengthen your financial protection enabling you to live the life you desired in your old age.
Protection from bankruptcy
The assets that one acquires during their retirement plan are well protected from bankruptcy. This is because they don’t belong to an employer. This is to say that if the business goes down, the employees will still have their assets as the beneficiaries.
On the other hand, if you happen to be bankrupt, your creditors will not come for your assets. This is a major advantage of having a retirement payment plan.
Peace of mind
Peace of mind is the first thing that comes into one’s mind when retirement is mentioned. Nobody would want to be stressed in old age with worries about how to pay bills.
When you have a good payment plan, you will experience peace and some assurance about the future. Many people have gone into depression immediately after retiring because they could not afford even their basic needs.
Old age is inevitable unless one dies prematurely. Retirement planning should be one of the main things to give your attention. It starts with having retirement goals and considering the time they will take to be real.
Finding a good retirement account should be a priority. However, the account should be able to help you raise money for your future. Life is uncertain, and no one knows what tomorrow holds.
This is why you should start planning for your retirement as early as possible and secure your future.