Importance of Retirement Planning

The sooner you start planning for retirement, the better. Although not an absolute guarantee, it is much more likely that you will meet your financial and non-financial goals with early planning than without it.

Planning allows you to assess your situation and identify potential problems. Early planning provides you with the opportunity to improve your situation and to deal with the potential problems identified.

Financial Calculators To figure out what it will take for you to become a millionaire, use this Cool Million Calculator. Consistent investments over a number or years can be an effective strategy to accumulate wealth. Even small additions to your savings add up over time. Use this Savings Calculator to examine how to put this savings strategy to work for you! Use this Retirement Shortfall Calculator to determine your projected retirement savings shortfall or surplus.

Similarly, time can also be your best friend when it comes to saving for retirement. It may be stating the obvious, but the more money you save for retirement, the better off you will be. By saving earlier rather than later, however, you can accumulate the funds you need for retirement with much less drain on your monthly resources. To see how this works, consider the following table examining how dramatically your required monthly savings amounts change with time to reach the same $100,000 amount.

Don't forget that this illustration assumes an 8 percent annual interest rate. Over the past 30 years, this rate has been both unrealistically high, and unrealistically low. Unless you can get investments that guarantee a fixed rate of return, keep an eye on prevailing interest rates and adjust your savings accordingly.

At this point, you are probably cursing the fact that time travel technology has not developed to the point that you can go back and warn your younger self to start saving early. If only you had saved the money you squandered in your youth, or even a mere fraction of each paycheck, funding retirement would hardly be a problem for you now. Alas, a momentary regret is all you can afford and all you should allow yourself.

Speaking of reality, retirement planning provides a reality check for issues you never would consider otherwise. We cover these issues in more detail in the following sections.

• : Most people can look forward to a life that extends well into their 70s and beyond. Find out why longer life spans require more attention to retirement planning issues.
• : It probably comes as no surprise that the cost of living increases every year. Learn how the effects of inflation can make or break your retirement plan.
• : Having a pension or other type of retirement plan through your employer is a great thing. Relying too heavily on such plans to meet your retirement needs is decidedly not a great thing. Discover the limitations that are part and parcel of employer-provided retirement plans.
• : Anyone who is even remotely familiar with how our Social Security system works knows that it contains very little security. Read more horrifying facts about what the government does with the money it withholds for Social Security from your paycheck and what you can (or can't) look forward to when you retire.

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