Retirement planning is crucial, and ignoring it could seriously hamper your retired life. Planning for retirement, typically, means securing yourself financially in the future against known and unknown factors such as inflation, and sudden situations like Covid-19, or other such situations. Without proper retirement planning, one becomes financially vulnerable in the later years of life that’s why Retirement Planning Should Not Be Ignored

Planning for retirement as one approaches one’s retirement age is not advisable, as it would not offer the person all the benefits that one can get if he/she had planned for it early, while still young.

However, many young people ignore planning for their retirement, in the belief that there’s a long way ahead, and consequently, fail to plan for their old age. They either depend on others for financial matters or ignore their planning completely, possibly due to overconfidence in their physical and mental capabilities in old age.

However, having no financial planning for life after retirement can put one at risk of experiencing difficulty in later years of life. Here are three main reasons why you should not ignore your retirement planning.

Compounding Benefit: Anyone thinking of immediate financial needs and delaying retirement planning, assuming they have lots of time left could face costly consequences. An investment made at an early age can enjoy the benefit of compounding, whereas an investment made in later years cannot, as compounding works best in a longer time span. Whether one plans to retire early in their 30s, 40s, or 50s, or later in their 60s, planning and investing early can help one reap the benefits of compounding.

Also Read: How To Deal With Retirement Anxiety?

Life Expectancy: With medical advancements, life expectancy is also increasing. According to UN estimates in 2022, life expectancy in India is expected to rise to 75 years by 2050 and 82 years by the end of this century. If one is not planning for retirement or planning for only 10-15 years of retired life, the increased life span could be challenging without proper financial planning. If one retires at 60, they will have around 20-25 more years to live, and thus there should be enough financial resources to take care of this period.

If one plans to retire early in their 40s or 50s, there will be more years of retired life, which makes making well-thought financial planning even more important.

A Comfortable Future: The other aspect, of retirement planning should not be ignored, is having a comfortable old age. However, imagining it is different from planning for it. It needs effort and persistence to work on aspects that will be difficult to have in old age, such as health, stamina, finances, etc.

While these are inevitable, health emergencies and expenses can be handled well with proper financial management and suitable insurance coverage. Health issues start surfacing as one grows old, and planning in advance can help avoid surprises. But, in reality, it comes as a shock, because of a lack of planning, such as investment in instruments that have a lock-in, or taking a policy that has a small network of hospitals, or no cashless facility, among many other such issues.

But with proper retirement planning, one can sail through tough times without depending on others, and enjoy the same lifestyle without cutting down on expenses.

In short, ignoring retirement planning could be costly due to missing out on the compounding benefit of building wealth, lacking or having costly risk cover, and insufficient savings and income sources. It also means a reduced quality of life, which can be avoided if one ignores retirement and is not mindful of saving and investing for retirement from an early age.