Understanding the Concept of Retirement Planning

Are you concerned about the future of yourself and your family? Do you often think about how your life would be after you retire? If worried about the financial future of your loved ones and yourself, it is advisable to consider retirement planning at the earliest. Yes! Even if you are years away from the day of your retirement! 

What Is Retirement Planning?

True to its name, retirement planning is about establishing retirement income goals along with the actions and decisions needed to attain them. In other simple words, it is all about planning for the life after retirement from both, financial and other aspects of life. Of high importance, retirement planning is recommended even to young people in their early years of life so that by the time they reach their retirement age, they do not feel financially unstable for their life ahead and especially, life after their working years are over. 

Why Retirement Planning Is Important?

Retirement planning is the ultimate combination of personal and financial planning. While personal planning helps one determine their satisfaction during the retirement period, financial planning helps in creating a budget of the income and expenses on the basis of the personal plan. There are many reasons that make retirement planning highly essential. Let us shed light on them. 

Key reasons that make retirement planning important are:

• You cannot work all your life and will retire one day when you will no longer get regular income from your employer.
• Retirement is the best time to fulfill life expectations and you wouldn't have to compromise on it if you have done proper retirement planning. 
• Higher complications or medical emergencies of any kind may require you to be financially strong in your older days.
• While you may think you would spend your life happily with your pension, you may still require a significant sum during your life after retirement. 
• Doing proper retirement planning at the present time will save you from depending on your children for your life expenses.
• Proper retirement planning at an early stage will help you plan for your contribution to your family even during retirement.
• When you start planning early, you get multiple chances to diversify your investments.

Stages of Retirement Planning 

Below mentioned are the different stages of retirement planning that one may find themselves in: 

• Young Adulthood: While the young adults may not have a major amount to invest, they have ample time to let the investments mature. Investments like such lead to large pieces of investments with regards to the principle of compound interest. Remember, if you are investing early, the power of compounding or compound interest will allow the interest to be calculated on interest. The more time you will have, the more interest you will earn.
• Early Midlife: Early midlife can bring a series of financial stresses like student loans, insurance premiums, and others, thereby making it difficult to save during this period.
• Later Midlife: This is every individual's last chance to fill the gap between actual savings and the retirement plans. However, by this time you will have a higher income and most of your debts would be cleared, you will have a larger sum available for investment.

That said, don’t waste any more time. Start thinking about your retirement planning! If in need of any assistance, do not forget to call InsuranceDekho experts today!

Also read - How Is The Pension Calculated ?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.