Once you start earning an income, retirement planning should be one of your top priorities. While saving for retirement might seem insurmountable, you’d be surprised at how much wealth you can build by developing good money habits.
In this article, we’re sharing the top reasons why retirement planning is so important.
1. You can’t work forever
When you’re young, it’s easy to think you can continue working long hours forever. But once you age, it will become more and more difficult to perform your job at a high level. Likewise, you may develop a health condition or age-related illness that makes working even more difficult.
This is why retirement planning is so important. Even if you have no problem working during your golden years, the truth is, you may not be able to. By setting aside enough money every month, you won't have to worry about earning an income in the future.
2. You can maintain a good quality of life
According to the U.S. Department of Labor, the average American spends about 20 years in retirement. On top of that, the average life expectancy in the U.S. continues to rise. This means you should have enough money in your retirement account to last at least two decades.
Saving for retirement isn’t just about being able to “get by" in the future. With proper planning early in your career, you can maintain a great quality of life once you’re ready to stop working. In fact, people who’ve planned properly have the freedom of taking their dream vacations and checking off bucket-list items during retirement.
3. Even small contributions can make a difference
It's common for people to put off saving for retirement until they start earning a higher salary. Even if you don’t earn much, you can still hit your savings goals over time. This is all thanks to “compounding interest.”
Compounding interest means that your interest is based on the initial principal, plus all of the interest that has accumulated in previous periods.
Over time, small (but consistent) contributions can really add up. Simply put, if you don’t contribute to retirement early, you’re leaving so much extra money on the table.
4. Relying on Social Security is risky
Currently, those who’ve reached retirement age are eligible for subsidized medical care and other benefits from the U.S. Social Security Administration. Given that the SSA has faced challenges, future payouts may decline.
Even if payouts remain unchanged, Social Security is meant to supplement your income, not replace it. Relying solely on Social Security checks will not provide you with a good quality of life. It’s best to have your own safety net to rely on once you reach retirement age.
5. It’s unfair to burden family members
Some people don't save for retirement at all. Instead, they assume that family members can help them out. While your loved ones may look after you in the worst case scenario, it’s unfair to rely on family members as your only backup plan.
Saving for retirement is your responsibility, and yours alone. With a proper retirement plan, you can secure your financial future without being a burden to loved ones.
Speak to an expert about retirement planning in Lenexa, KS
If you want to maintain a good quality of life as you age, then you should make retirement planning a priority. The retirement experts at OWLFI can help you create a plan that fits your goals, income level, and lifestyle.
Schedule an appointment today to get started.