 for not only a big wedding, but also invest in gold to give to the daughter when she gets married. On the contrary, no one ever tells a young man who has just started in a salaried job to start saving for his retirement.
Importance of Retirement Planning
One must understand that retirement planning is really important. If one plans to take full retirement at the age of 60 and expects to live up to the age of 80, we are talking of 20 years of no cash flows from an active job with expenses continuing. What’s more is that the expenses are most likely going to increase as the medical expenses go up. One also has to take into account the fact that even though the expected age maybe 80, an individual may quite possibly live well past that age. This only means a prolonged period of expenses with no remuneration from a work-life.
Points to Keep in Mind During Retirement Planning
We have put together some points that might help an individual focus towards a proper retirement planning process.
- Retirement is inevitable – One must understand that at some point in time you will not be able work anymore. So, one needs to make sure that they planned their investments in a method where the cash flows continue.
- Start Early – This is the key to a comfortable retirement. The earlier one comes to term with the fact that retirement will happen the earlier they can start to save for it. Early planning gives one more time to accumulate and earn on savings. It also allows a person to take higher risks for more gains early on in life.
- Diversification – Though early on in life you may have a preferred asset class such as equities, as one ages it is very important to diversify.
- Inflation – One must always keep in mind that at retirement, which may be 20, 30 or 40 years away, the price of things is going to be many multiples of what it is today. It is always better to use a higher rate of inflation to estimate expenses.
In conclusion, we can say that with retirement, “one must plan for the worst and hope for the best” and surely not the other way around.