Retirement planning is something that some individuals may have available through their employer, through options like a 401(k) plan, while others may choose to also invest in Individual Retirement Accounts, like a Roth IRA option. However, recent reports have shown that some individuals may not be saving enough for their retirement, which could cause difficulties later in life. There are some people who have stated they plan to work during their retirement, to simply make ends meet, but there are arguments that careful retirement planning could allow more security later in life.
Options like Social Security may not be available for some, as the reliability of this funding has decreased over the years and some feel there will simply be no financial assistance for retired individuals through the Social Security program. It’s for this reason that many advisers are stressing that more individuals begin planning for their retirement through plans like 401(k)s or IRAs, simply as a safety net in case expenses arise when one is retired.
Obviously, funding for Social Security may not be exhausted for young individuals who are working at the present time, but there are factors like medical expenses which could cause the overall cost of retirement to rise for many after they have left their job. Understandably, individuals who are closer to retirement may have fewer options when it comes to saving the maximum amount they could for retirement, but individuals who may be younger or middle-aged could use, again, 401(k)s or IRAs as a way to begin saving and investing for their retirement.
Arguments for saving more for retirement often center around practicality as workers who are investing in their retirement may have to make financial sacrifices now in order to save, but could have a much easier financial life after they have retired. Those who are not planning properly at the present time will, obviously, have a reverse situation and may have to seek out employment opportunities after they have retired or make drastic cutbacks in their financial lifestyle.
While there are various retirement opportunities available, investments like Roth IRAs have been used by more individuals because earnings may be used tax-free once an investor reaches a certain age. There are alternative retirement accounts, like traditional IRAs which offer tax incentives at the present time, meaning contributions will not be taxed, but there is still the fact that these types of retirement accounts do require distribution at a certain age and can be taxed later.
However, financial planners often feel that any type of retirement savings or planning program is better than having no retirement plan at all or relying on things like Social Security as a way to meet expenses later in life. While there are no guarantees that Social Security may be exhausted in the coming decades, there are factors like medical costs or simple living costs which may be unmet unless an individual properly prepares and saves for their retirement needs.