If you want to know the importance of retirement planning, this article is really going to help you!
It reveals a lot about retirement planning and exactly why it’s very important. It also provides tips to help you get started with this, if you haven’t already.
Why Retirement Planning?
First things first…
Half-full or half-empty?
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A person’s answer says a lot about themselves.
Some suggest that if a person says the glass is half empty that they tend to look at things pessimistically.
Perhaps their perspective is on the portion of the class that doesn’t have any liquid in it.
Others would say that this viewpoint is simply being realistic.
If a person says that the glass is half full then they would be deemed by others as being optimistic.
Their focus is not on the portion of the glass that has no liquid, but their focus is on the portion of the glass that has liquid.
Many would say that the answer of being half full gives the perspective of the individual being optimistic.
It would seem that neither perspective is wrong or right or perhaps it doesn’t even reveal their attitude towards life.
The same can be said about retirement. If you ask one individual about retirement, they may view it through a glass half empty and try not to deal with it and just shelve it for the time being.
On the other hand, an individual may look at retirement as the glass being half full and realize, like it or not, retirement looms large in everybody’s future.
With the completion of each working day, one day closer to retirement occurs.
The growing reality is that one day you will suddenly realize that retirement is no longer an event in the far distant future but perhaps five 10 or 15 years away.
Currently, you feel good, and job wise you are at the top of your game, the way you are feeling, and you think you can work forever and ever.
However, maybe your company requires retirement at a certain age, or perhaps your company is merging with another company and rumors are spreading like wildfire.
Some of those rumors whispered say that certain people may not make the transition and they’re talking about early retirement for those individuals.
You can let life happen to you or you can sit in the driver’s seat and, for the most part, be in control of life rather than the other way around.
Importance of Retirement Planning
1. Living Longer
When it comes to the importance of retirement planning it is important to take into consideration the medical strides and medications available today to not only prolong our life but make our quality of life better.
Unlike in previous generations where the life expectancy was in the 60s or the early 70s, today, individuals are looking at the strong possibility of pushing that age lifespan higher.
Therefore, it is important that adequate retirement planning is in place.
This will ensure that the lifespan of your retirement monies is equal to or exceeds the lifespan possibility of your life.
2. No Sure Thing
As we work hard in life at our particular occupation or vocation, part of the monies taken out by the federal government is put towards our Social Security.
Unfortunately, many today sound the alarm that the Social Security fund will not be available to those who worked hard for this benefit.
When it comes to retirement planning, nothing is certain.
There may be the rise and fall of the stock market, there may be the ebb and flow of investment returns, and there’s no guarantee that there will be Social Security monthly payments.
It is important to plan accordingly.
The best way to do that is not to plan on having a Social Security monthly check but to plan on accumulating enough wealth in your investment portfolio to plan for that contingency.
3. Cost to Grow Older
In being the bearer of bad news, it is important to remember that with each passing day we are getting older and older.
The reality is, as we grow older so to the costs associated with our aging increase.
The strong possibility of insurance coverage, cost of medications, possible medical procedures, and other associated medical expenses may occur be constantly on the rise.
Added to the mix is the worst-case scenario if we as individuals cannot care for ourselves or have become too much of a responsibility and burden to our loved ones.
In situations like this, it is not a matter of whether they care for us or love us; it is a matter of whether they can practically meet our physical and mental needs as we grow older.
Therefore, an important aspect of financial planning is to make sure that we plan our retirement accordingly and take in all contingency plans regardless of whether they are positive or negative.
4. We’re Not Bunnies
Although many of us feel like we can go on and on forever and continue to work at our jobs, the reality, once again, is that we are not like that bunny that goes and goes for hours on end.
The other harsh fact is that behind us in the workforce is a younger generation that has skills and talents that may enhance the business of the company.
Therefore, we need to be gracious to know when to let the next generation of the youthful workforce take our place.
5. Being Independent
As older adults, we have always been taught and now pride ourselves on being independent.
By being independent, we try not to rely on the government or others to help us make our way in this world.
Therefore, as part of our philosophy of life and continued attitude, we don’t want to be dependent upon anything else or anyone else for our needs.
This is not to negate the importance of family as we certainly need their loving and encouraging support.
However, if we have not planned responsibly and consequently not having the financial resources may necessitate moving in with family.
This would put an added strain of multi-generation support on our children.
6. Never Too Early
Remember, when considering retirement planning it is never too late. We do not have our yesterdays, but we have our today’s.
Therefore, start or continue with investing and following your retirement plan. If one is in the process, modify as necessary to make it even more robust.
On the other hand, if a retirement plan has not been started then it’s time to put your financial planning for your future in high gear.
At the age of 50 or older, the IRS allows for the individual to exceed normal contributions to make up for previous years.
7. Dreams Come True
Another important reason why retirement planning is powerful is to fulfill your dreams.
You and your spouse have worked hard and diligently to provide support for family members.
Along the way, there have been hiccups and detours that needed to be addressed. However, you moved forward still working towards your retirement years.
The reality of life is that we all dream but just dreaming does not make our dreams come true.
There needs to be considered hard work associated with making dreams become a reality.
Those retirement dreams could be a cross-country railroad trip, an exotic vacation, moving to a smaller place near your favorite beach, or just spending time with the grandchildren.
Regardless of what your dream is, it is your dream, and you want to work hard to make your dreams come true
8. Retire Early
Another reason why you may want to understand the importance of retirement is that all we have is today. We are not promised any tomorrow.
You may have possibly heard of a family who experienced the curveballs of life.
Their plans for a future together and enjoying each other in the retirement years were suddenly disrupted by an illness, a death, or another major life event that causes heartache and shatters dreams.
9. Teaching Others
Our role as adults and possibly as parents has always been a commitment to teaching our children.
This teaching is accomplished in two ways.
One by instructing our children about what to do, what is right, and what is wrong.
Another way that teaching was made powerfully real to our children was by example.
By following through on your commitment to planning for your retirement you are teaching others and your children by example how to be responsible individuals.
This is probably the greatest role that we have and our ability to lead by example
Through retirement planning, you are a teacher. You are leaving a wonderful legacy to your family.
As a responsible citizen, you have always done your fair share in paying your taxes.
That doesn’t mean that you overpaid but paid what was entitled to the country that provides for your protection and protection of your rights.
When we retire that obligation of paying taxes doesn’t stop. We are retiring from our jobs not retiring from being a citizen.
To minimize the tax burden, it is important to consult a financial planner and do one’s research.
Many financial advisors recommend that three particular “buckets” of sources of income be established.
The one bucket of the retirement planning process is monies that are categorized as tax-deferred.
These include any pension plans Social Security, 401(k) s, and taxes that were prepaid on IRAs.
The next bucket or stream of revenue should be labeled as tax-free.
These are investments that you made that are not subject to taxes when they are part of your retirement income stream.
Such tax-free vehicles include Roth IRAs, municipal bonds, and health savings accounts.
The last source of income as part of the planning should be a bucket labeled tax-managed.
These are standard brokerage accounts and are comprised of tax-efficient investments such as index funds.
Although taxes are inevitable, one may be able to control their tax levies due to their retirement planning.
This can be accomplished by setting up different buckets or diversifying one’s revenue streams.
11. For Yourself
You have worked hard, you have sacrificed, and you have put, sometimes your needs, or desires on the back burner.
The important thing about financial planning for your retirement is that you are taking care of yourself as well as the significant other in your life.
You are fulfilling a vow and a commitment to care for one another.
Retirement planning is comprised of financial actions taken towards a positive future.
I daresay that for most of us retirement planning doesn’t first begin with our first contribution to our 401(k), Roth, or traditional IRAs.
Retirement planning begins with our minds and through a future prism while living in the present moment.
Based on my experience with money and the lessons that were learned from my family, the use of money was never about the future.
The use and the need for money were in the present moment.
There were bills to pay, groceries to be purchase for our family of seven, rental due to the landlord, and then there were lifestyle choices.
Those lifestyle choices included buying that new color TV, eating out occasionally, extended vacations, etc.
My retirement concrete retirement planning began with enlightenment through a financial book that I picked up by Joe Dominguez.
That book is entitled to your “Money or Your Life.” And so, with my changing attitude towards money came an attitude change towards retirement planning.
There is only one guarantee in life. That guarantee is that there are no guarantees. Life moves on with us or without us.
We can understand the importance of living fully in the now and preparing for our tomorrow.
Our tomorrows can be prepared for by realizing the importance of planning for our retirement and doing everything within our sphere of influence to reach our goals and our dreams.
Ready or not the glass half full or half empty waits.
Perhaps, rather than concentrating on the liquid, the individual planning for their retirement should focus on the empty portion of the glass.
With that focus, the goal then becomes how to fill the retirement glass to the brim.