Importance of Retirement Planning

• 21st Sep 2021
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Young minds are generally more occupied with the newness of adulthood, exciting career avenues, budding relationships, and more. Among the host of things they wish to explore, retirement planning is not on the top of their priority list. However, the fast-paced world we live in is full of uncertainties, and it goes by so quickly, leaving us with little or no chances to resuscitate. Therefore, early retirement planning is advisable to enjoy those golden years.

What is Retirement Planning?

Retirement planning is a process whereby a person obtains a roadmap of their personal and financial life, which will help them meet all their life expenses post-retirement. Outlining for retirement assures an added source of income and assists in handling and managing fulfilling life aspirations, medical emergencies, and being financially self-sufficient. Also, it serves best to start planning your retirement from the early stages.

Why is Retirement Planning Important?

Engaging in secure retirement planning is crucial to stay financially secure. A structured retirement annuity plan equips you to handle various factors such as surpluses, shortfalls and emergencies. So ultimately, a thorough retirement plan will let you develop a comprehensive understanding of your life goals (the aims) and define the path (the tools) to achieve the same. Here’s why you should start preparing early on rather than when it’s too late. Let’s dive in:

• Fulfill Retirement Goals Retirement takes you to a new phase of your life wherein you can genuinely make the time for yourself and indulge in activities that you have not been able to pay attention to during your work life. These can include picking up on an old hobby, actively working on your kids’ future, working on a venture you have been planning for years, etc.
• Emergency Ready Nobody can account for what is going to happen tomorrow. In such situations, it is best to stay prepared ahead of time and retirement plans allow you to do exactly that. By investing in one, you will ensure that you do not have to depend on anybody else financially in case of a medical or general emergency. The emergency fund will take care of that.
• Good Standard of Living We all follow a certain lifestyle and with age, it gets deeply incorporated into our daily habits. The lifestyle we lead today is because of the income we receive every month. To ensure this same standard of living post retirement, investing in a retirement plan is necessary. That will help you with a steady income every month even after retiring.
• Beating Inflation Inflation can be defined as the rise in the price of goods & services. As we know that inflation is increasing day by day, the effect of inflation, which seems to be small in the short term, can be huge over a few years. This means that an individual will have to pay more for all expenses in the future. Thus, while performing vital retirement planning, you can consider this determinant and generate a sufficient retirement fund for your future to live a peaceful life.
• Zero Family Burden During your retirement, you shouldn’t be dependent on anyone, especially your own relatives. Having a firm plan in your position will ensure that you don’t convert into a financial responsibility for those close to you. You want to be in a place to be able to help a family member’s financial condition, not to make things adversarial. If you’ve planned consciously and kept a healthy amount loaded away for retirement, you may have a lovely gift to give your children by adding to their wedding plans or grandchildren for their studies, gifts, etc., when your time comes.

In addition to these, you get tax benefits, reduced costs on investment plans, no financial obstacles for the future, and in the end, a stress-free life. With all these benefits and more, you can’t deny the fact that this is indeed a terrific investment opportunity to give up on.

That’s right — start today! Not tomorrow. Now that you have understood the importance of retirement planning, you can start by refining your smart retirement plan today.

- A Consumer Education Initiative series by Kotak Life