A retirement investment plan is a financial arrangement which is designed to replace your salaried income when you retire. These plans are usually set by employers, insurance companies, the government, trade unions or other financial institutions.
Read on to learn why investing in preparation for retirement is important:
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1. Increased life expectancy
This is an important reason to kick start your retirement investment plans at the very beginning of your working career. The average life expectancies of people are increasing due to advancements in medical science. A longer lifespan means you need more savings to finance your life after retirement. With an average lifespan of 80 years, a substantial amount of funds is required to be saved.
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2. It is risky to completely rely on Social Security
After retirement, every American becomes eligible for lower medical expenses and monthly benefits from Social Security. However, this alone is not enough to fund a comfortable retirement life. These benefits only cover the minimal costs borne by the government for retired seniors. Social Security and Medicare can only serve as supplements to your retirement investment plans and you should not solely depend on them. To live comfortably, you’ll need more savings.
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3. Be prepared to face any financial crisis in the future
People tend to hope that the future will sort itself out, but this isn’t something you should bank on for your retirement. There may be more financial crises and hardships waiting in the future. A proper retirement investment plan can save you from financial issues that may arise down the road.
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4. It is not a good idea to depend on your family
Although your children may look after you when you retire, you should not plan on being financially dependent on anyone. Financial independence after retirement will only be possible if you have saved enough funds for the long term.
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5. You cannot work forever
Sometimes people start to believe that they can work until they drop. However, as people age their efficiency decreases and they slow down. No matter how much you want to work for your entire life, this can never be an excuse for neglecting to make a retirement investment plan while you are young.
Planning and investing during your early working years is an opportunity to create a peaceful retirement for your future. Retirement is the time when financial worries should be set aside, so plan your retirement investing now if you haven’t already.
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