Here are five good reasons to start your retirement planning right away:
- 1 Reason No.1: People Are Living Longer In Their Retirement
- 2 Reason No.2: Old-Age Social Security System Is Breaking Down
- 3 Reason No. 3: Social Security And Employer Pension Plans Are Not Sufficient
- 4 Reason No. 4: Costs For Treatment And Drugs Has Risen
- 5 Reason No.5: Starting Early The Better For You
Reason No.1: People Are Living Longer In Their Retirement
With recent breakthroughs in medicine and technology, expect to live 20 years and more after you retire. You thought you will die sooner, Ooh No! You will have more birthdays to celebrate….Okay, I can’t guarantee you will live longer, am not God, but it’s a fact now that people are living longer in their retirement. Be prepared, your retirement years might equal your working years.
If you dread living without an income now when you are still strong and can work, tell me, what will happen when you are old and can’t work again? Don’t answer that. That’s food for thought.
You may also want to read this article: Risk Management in Personal Financial Planning
Reason No.2: Old-Age Social Security System Is Breaking Down
The old-age social security system is breaking down. Our children, alright I don’t have one now. But what am saying is, they can no longer be relied upon to support us. They have their own financial challenges to deal with. You better plan to deal with yours.
What about the governments’ Social security programs? You didn’t know? They are all broke.
But aren’t they paying retirees every month? Yeah! They do. They are using current contributions to pay them.
Then what about us who will retire later? Oh you? Don’t worry. They will do the same. Use current contributions to pay those retiring.
But how much are they paid anyway? Something to keep them going. Not much but you know something is better than nothing.
You know what? This isn’t good. Why? Read reason no. 3
Reason No. 3: Social Security And Employer Pension Plans Are Not Sufficient
Social security and employer sponsored retirement plans, if you have one, are most often insufficient to cover the retirement cost of living. With fewer firms/organizations offering full pension plans and the uncertainty of Social Security it has become more important now than ever to save and invest for your own retirement.
People used to fund their retirements with Social Security and pensions, but today a large portion of them rely more on personal investments to support their retirements.
Wouldn’t you like to maintain or improve your standard of living when you are retired? I bet you do.
Then start your retirement planning for that lifestyle you want.
You may also want to read this article: Control Your Personal Finances Through Proper Money Management
Reason No. 4: Costs For Treatment And Drugs Has Risen
I said Even though it has been said that you can live longer after retirement due to breakthroughs in medicine and technology, the costs for treatment and drugs has risen. Old age comes with it a lot of health complications and some of which are expensive to treat. Your medical bills will continue to increase the older you get, so you need to start planning for them now.
You can prevent, minimize or delay some of these ailments while you are still young, strong and health by living a healthy lifestyle- exercise regularly, eat well…okay eat a well balanced diet, quit drinking (although am told a little is good for your health. Damn these researches! They are really confusing us) and smoking, always smile, have heart-full dozes of laughter, get rid of stress,…
Reason No.5: Starting Early The Better For You
“Saving a little will not help.” Who said? A small amount saved every month results in a huge payout later.
Lets see…If for example, at age 25, you start investing something like Ksh. 2,000 monthly for retirement in a personal retirement fund that provides a 7% average annual return. After 10 years, you stop making contributions for the next 30 years. You shall have accumulated something like Ksh 2,826,074 in your retirement fund.
Now, on the other hand, let say you wait until age 40 to begin investing Ksh 2,000 monthly and continue to do so for the next 25 years. Your retirement fund will have Ksh 1,629,594.
You see the huge difference: Ksh 1,196,480. Even though you invested for only 10 years when you started at age 25, you end up accumulating a significantly larger retirement fund by the time you reach age 65.
That’s the power of compound interest.