According to the Employee Benefit Research Institute’s (EBRI) 2020 Retirement Confidence Survey, 31% of American workers are not confident that they will have enough money to retire comfortably. And 61% say that preparing for retirement makes them feel stressed. Do you have a retirement strategy in place? Here are six reasons why you should start planning for retirement right now.
1. Longer life expectancy
We’re living longer, so we need our retirement savings to last longer. The average life expectancy for men is 82 years old, and the average life expectancy for women is 84 years old. If you retire at age 65, you’re looking at about 20 years in retirement where that money has to last.
2. Changing responsibility for retirement planning
Now more than ever, retirement is built on personal savings, and it’s up to the individual—not the government or employers.
3. Inflation risk
Inflation risk is the purchasing power of your dollar. For example, what it costs today to buy a loaf of bread may cost twice as much in the future.
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4. The sooner the better
The sooner you start planning for retirement, the better off you’ll be. If you begin saving early, you can get a good head start on building a comfortable retirement. Not only will you have a better chance at reaching your financial goals by the time you reach your desired retirement age, but you’ll also feel less stressed.
5. Social Security
Social Security accounts for a good portion of many people’s retirement. There are also some penalties and taxes that are involved in Social Security. So proper planning around that is crucial as you approach your retirement age. Furthermore, it’s important to realize that there’s a difference between taking Social Security at age 62 and taking Social Security at your full retirement age.
6. Medical expenses
Medical expenses are expensive now, and they’ll continue to grow over the course of your retirement. There is Medicare, but there is some important planning that’s involved with Medicare that you’ll need to take into consideration.
As you start planning for retirement, keep in mind that you won’t want to rely completely on Social Security and Medicare. The sooner you start preparing and saving, the more likely you’ll be to have enough money to live comfortably throughout your retirement years.