Retirement is inevitable. There will be a time in your life when you wouldn’t be working any longer in your regular job. But did you know that the post retirement period can be quite expensive, especially because of medical costs?
As you would not want to become a burden on your loved ones, you need careful and meticulous planning of your finances. This will ensure that you have a regular source of income and enough savings for the most expensive years of your life.
With rising life expectancy, the chances of people outliving their retirement savings have also increased. Adequate planning for your retirement means investing early to provide a cover for your retirement expenses. Besides, life is full of uncertainties and your savings will also come in handy to deal with unexpected events.
Retirement planning can protect you from the risk of depletion of social security funds. With the percentage of older people in the population likely to increase even further, social security may soon see its payouts exceed its collections. In fact, there is a possibility that the system could come to a grinding halt if the benefits are not lowered. So don’t assume that things will always stay as they are now.
Mounting inflation and the possibility of rising tax rates provide you another reason to insure yourself for the future. With the recent price hikes witnessed in essential commodities, food expenses could become an area of concern. Health care expenses increase even more rapidly than the overall inflation, so you may want to start a health savings account or get better coverage. If you have taken the house on a mortgage, make sure that the loan is paid off by the time you retire so that you do not have to worry about payments.
Your location, or where you plan to settle after your retirement, is another important consideration. Before deciding where you want to live in your post retirement years, it is very important to think about energy costs, travel costs, and insurance costs of the house.
Financial independence is very important during your retirement years. Make sure that you are disciplined when it comes to managing your retirement funds. Government-run programmes such as social security, and retirement accounts like 401(k) plans and IRAs will help you plan for your retirement. But the most important thing is to start early to give your savings more time to grow.