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Why should you plan for retirement - Importance of Retirement Planning

Updated on August 26, 2011

Importance of retirement planning

Planning for your own retirement is always a question in mind. Most people always be in a dilemma whether is it the right time to plan for retirement, or moreover whether should I plan for retirement, is it really required?? Post retirement life is entirely different from your current lifestyle. You probably will not have anything concrete to work on; probably you may not have the strength to work hard. During this phase of life, your body needs some extra rest. But if you have a robust retirement portfolio, you will never have to worry about the funds and will be able to easily enjoy your life post-retirement without being depending financially on your children for day-to-day expenses.

Why plan for retirement

When you grow older, say around 45-50 years of age, you may feel less active and may wish not to continue working. But will you then have sufficient funds in your account to continue your current lifestyle for the rest of your life? Probably, you won’t have sufficient funds if you had not plan for retirement at the start of your career. In short, you can not quit working, as your financial condition will not be strong enough. So, in order to live a better post retirement life, you must plan for retirement and moreover, the earlier the better.

When to start saving for retirement

If this was the question in your mind that when should you start to save for retirement, then you should not wait for another month or another year. Start saving and investing right from the day you start earning. If you are already late, do not wait further and start building your retirement portfolio.

Early retirement planning is also helpful if you opt for early retirement voluntarily or due to some health issues. If you have a sound retirement portfolio, you may not face much problem, but if you had not planned for retirement, it will be a great trouble for you and your family to survive post retirement. So, do not wait to plan for retirement lest it will be too late to grow your retirement fund.

Benefits of early retirement planning

  • Enough time to grow your money
  • Investing in Long term investment instruments helps to exponentially increase your retirement fund
  • Robust Retirement Portfolio

Let us look at these benefits with the help of an example. Suppose, if you plan for your retirement at a later stage, you will only be left with 10 years to save for retirement; then even $1,000 every month at 8% annual interest rate will create a retirement fund of $187,700. And if you will put $500 for 25 years at the same interest rate, you will get around $473,700, which is more than double by investing half of the amount. So, certainly early planning of retirement is fruitful which will lead to a better retirement life.

Monthly Investment ($)
Years
Interest Rate
Total Amount ($)
1,000
10
8
187,700
500
25
8
473,700
Early retirement planning helps to build a robust retirement portfolio.

If you have no idea how to start and invest for retirement, check out the below link to get a better idea.

In case, you are already late for planning of your retirement and looking for monthly income, check out the below link to find different options to work after retirement.

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