9 Facts That Highlight Why You Should Prepare for Retirement

February 9, 2023

When you're young, you may have plenty of time to prepare for retirement and create a savings plan. However, it can sneak up on you so you need to be careful. Fortunately, saving small amounts can have a big payoff down the line.

Prepare for Retirement with These Facts

If you're still on the fence about allocating more into your 401(k) or independent retirement account, here are nine facts explaining why retirement preparation is essential.

It's Possible To Run Out of Retirement Money

If you miscalculate the amount of money needed to retire, you may run out before the end of your life. Retirement planning can help you avoid this by considering essential factors:

  • Inflation
  • Medical expenses
  • Living situation
  • Members of your household

With a solid retirement plan, you know how much of each paycheck to put into savings.

Retirement Savings Accounts Offer Tax Benefits

Retirement savings accounts have different tax rules than regular ones, and the benefits vary by type. When you put money into a traditional IRA or 401(k), you do so before taxes. That way, your total taxable income for that year is less. However, you must pay taxes when you withdraw.

In contrast, you have to pay taxes on Roth IRA contributions. With this system, there's no tax when you withdraw, which makes a big difference when you're on a fixed income.

Time Maximizes Returns

Compounding interest means that the longer funds sit in an account, the more they grow. Even small savings can grow exponentially over 30 years.

The More Money You Have, the More You Can Do

When you retire, you have a lot of time on your hands. If you have enough money, you can do all the things you've wanted to but didn't have time for:

  • Travel
  • Hobbies
  • Collecting

Without Adequate Funds, the Burden Falls on the Family

If you run out of money, you need more than social security to live on. Instead, family members may have to help you, putting stress on their finances. These circumstances can breed resentment and even interfere with younger generations' ability to save for their own retirements.

People Are Living Longer

The average lifespan for people in the U.S. is about 77 years, but the average age of retirement is 61. You need to cover more than 15 years' worth of funding. With robust savings, you can enjoy these years to the fullest.

Early Investment Means a Diverse Portfolio

Financial experts recommend older individuals keep their funds in less volatile investments. Doing so decreases the risk of losing a significant chunk of change. However, younger people can benefit from putting their money in high-risk, high-return stocks since they have time to compensate for any losses. Both groups can use Annuities as a safe way to save.

Less Financial Stress Makes Everyone Happy

When you have more than enough to live on, you don't have to stress about bills. Less stress means improved health and a happier marriage.

Retirement Can Happen When You Least Expect It

While you may plan for a specific age to retire, sometimes life has other plans. Losing your job or becoming a full-time caregiver for a loved one may force you into early retirement. Saving as soon as possible means you have some leeway if your plan gets derailed.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.

Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.