One of the topics that generates tantrums on my part is the lack of planning that most of us exhibit when it comes to the issue of the aging experience. There are many elements to the need for planning, including financial. At Support For Home Health Care, planning for the aging experience is a family affair, tied to the ability to age in place, if that is one’s desire, whether ultimately confronted with health concerns or even dementia.
Nisha Sharma is a representative of MHA, in the United Kingdom, a not for profit organization providing care and accommodation services for 16,000 older people. She has written the guest blog, below, on the topic of “When Should You Start Thinking About Retirement?” It is written for an individual’s perspective, but I would ask you to read it in a broader context – the context of the family. This will help bring out the implications not just for each one of us, but for the folks impacted by our decisions.
With that said, thanks, Nisha:
Retirement may seem a long way off to someone still in their twenties and with the future being uncertain, saving for it may appear pointless. You may wonder whether or not it makes sense to start saving money when you have student loans to repay along with assorted debts and bills. The truth is that the need to save for your retirement never goes away. Debts are flexible in that you can gradually repay them over time; however, the fact is that you will one day need to stop working and live on what you have saved is a problem that you will need to solve over the duration of your working life. The main benefit of planning your retirement finances while you are still young is that you do not need to save as much from each paycheck as you would if you were to start saving later in life. The longer you wait to start saving, the more difficult it will be to reach the figure needed to support you in retirement.
The Problems of Aging
Make no mistake about it, getting older is not easy. It brings with it many difficulties, including ill-health and unpleasant physical changes; things that drive many into depression. Added to that are financial difficulties which can serve to exacerbate the feelings of despair. Many people would rather ignore the reality of time’s passage than face the fact that they are growing older. Financially speaking, age brings with it an increased need for expensive medical services, as well as a decreased capacity to earn. The fact that only 66 percent of Americans are presently actively saving for retirement means that many run the risk of winding up helpless and poverty stricken in their old age; furthermore, many of those saving are not saving enough. Practical thinking demands that you face your future needs and do something about them while you still can.
None of this should be taken to mean that you should ignore your present responsibilities in order to save for retirement. For one thing, before you start your retirement planning you should make sure that you have an adequate emergency fund in place. This can help you to cover unplanned expenses that may arise if you get sick or find yourself temporarily out of work. You should also be diligent in paying down your debts, whether they be from student loans or from credit cards. Note that high interest rates can dramatically impact your ability to save for retirement. Planning for emergencies and taking care of your debts can keep you from having to raid your retirement fund.
When contemplating whether retirement planning is necessary or trying to decide on a retirement saving goal, you should remember the fact that the cost of living is increasing. The amount of money you need to maintain a comfortable lifestyle is constantly going up. If you are under the age of 40, it is difficult to accurately predict how much you will actually need.
Keep in mind that 40 or 50 years ago when the current crop of retirees started working, it would have been all but impossible to predict the present-day cost of living. You can be relatively certain that the cost of living in the future will be more than it is now. This means that it is important to save as much as you possibly can. If you have a spouse, you both need to be on the same page about this as conflicting goals can result in financial and relationship problems down the road.
If properly planned, the transition from work to retirement can be a happy one. It opens up a new area of life for you, one where you will finally be able to travel and pursue your hobbies without having to worry about your workplace responsibilities; however, the planning part of it is essential.
You will need to think carefully about what you will need when you are older and then organize your life so that you can get it, the same as with any other goal.
Planning – a great thing for all of us. Best wishes. Bert