By Daniella Rand
Do you have a retirement plan in place?
If not, don’t feel bad. You’re missing out, but you’re not left behind. Millions of Americans are in the same exact position.
Still, it’s high time you did something to address this gap in your financial posture. Here’s why you need to get a retirement plan together this year.
1. You Can’t Rely on Your Parents’ Money
Let’s get this one out of the way: The vast majority of everyday Americans can’t count on a life-changing windfall to bail out their profligacy (or reticence to plan). Even those who did have the good fortune to be born into privilege can’t count on actually receiving the inheritance to which they assume they’re entitled.
Remarriage, out-of-control spending, poor financial planning, criminal activity — all these things and more can jeopardize what appears on paper to be generational wealth.
Your parents always told you to look out for number one, and that you shouldn’t rely on anyone else to act for you. Take that advice to heart and secure your own financial future, without their help.
2. You Can’t Count on Social Security (And It Might Not Be Enough, Anyway)
Despite its reputation as the “third rail” of American politics, the Social Security program’s long-term solvency has been in question for years. If you’re still in the first half of your career today, you may not want to rely on Social Security benefits to fund your retirement income shortfall.
3. You Probably Don’t Have a Great Pension
Most employers no longer offer pensions to new employees, and those that do tend to be less generous than their predecessors. If you work in the public sector or belong to a trade union, you may be in a slightly better position. But, as a general rule, you should treat your pension as you do your (expected) Social Security entitlement: as a bonus to the retirement income you’re able to guarantee through other means.
4. Inflation Is Inexorable
Recently, we’ve been fortunate to live in a fairly low-inflation environment. Prices continue to rise appreciably, but not at the breakneck pace that those of a certain age can recall from the 1970s and 1980s.
Unfortunately, there’s no guarantee that this condition will endure. The future may well hold another extended period of high inflation, spelling trouble for those without a plan to counteract it.
5. Your Needs Will Change Over Time
Your future income and expenses will change. Having a retirement plan in place ensures you’re able to keep up with those changes and adjust as necessary, especially if a major unforeseen expense suddenly presents itself.
Your Future Is Too Important to Squander
Laying out a retirement plan is one of the most important steps you can take toward financial independence.
This isn’t hyperbole. It’s borne out, again and again, by empirical research.
Your future prosperity, and that of your closest loved ones, may well depend on whether you’re able to engage in meaningful financial planning before retirement is imminent. That’s an awesome responsibility, and a sobering reminder that the future is a terrible thing to waste.