- Financial Security
- Live Comfortably
- Have More Fun During Retirement
- Peace of Mind
- Leaving a Legacy
A person who is looking toward the future should know about these five benefits of retirement planning. In its essence, planning for retirement involves making decisions during a person’s early adult years in order to increase the chances at security and stability during the person’s later years of life. Knowing about these five benefits of planning for retirement could motivate a person to take action now.
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1. Financial Security
Financial security is the number one benefit of planning for retirement. The capitalist economy of the USA does not guarantee any kind of worker pension. Social Security is unlikely to meet a person’s basic expenses during retirement. With a retirement plan, a person has an optimal chance at financial security during their senior years.
2. Live Comfortably
A retirement plan makes it possible to live comfortably. Most people will need about 80 percent of their working income during retirement. For example, a person who earned $50,000 per year on average while working will need a retirement income of at least $40,000 per year in order to maintain the same standard of living. With a plan for retirement, a person won’t have to worry about paying for food versus paying the gas bill.
3. Have More Fun During Retirement
Planning for retirement gives a person more freedom to have fun. During a person’s working years, there is often not enough time to travel or engage in hobbies. Once a person retires, there is more time for leisure travel, visiting with family, and doing hobbies. When a person has some money saved, they will not have to worry about having to work a part-time job during what is supposed to be their retirement years.
4. Peace of Mind
Many people worry about what the future will be like for them. They might worry about whether or not they will be able to afford the medication for their diabetes or if their housing costs will go up in price. Having a retirement plan provides a person with peace of mind. Knowing that there are assets ready and available for when a person stops working reduces the individual’s level of stress about the future. This could also be important for the individual’s children. The children of retired people often worry whether or not their parents will run out of money before they die.
5. Leaving a Legacy
Another part of planning for retirement is setting up an estate. Anyone with assets upon their death will have an estate, even if it is a small one. Some people have a goal of providing a considerable sum to a grandchild or a charity upon their death. A person who has done well with their investments and has a lot of assets could have a large, complicated estate that becomes a part of their legacy. According to Investopedia, an estate plan and life insurance are closely related and function as important parts of planning for retirement.
Planning for retirement may not be fun, but it is a responsible action for every adult to take. It is no longer the case that a person can count on employer-based pension or enough income from Social Security to provide for all of their needs after they cease paid employment. Understanding these five benefits of retirement planning could motivate a person to meet with a financial advisor, open a retirement account, and start saving for their future.