Many people work their entire lives with one goal in mind: Retirement. It’s one of the most important life events that is experienced by most people.


From a personal and financial perspective, achieving an easy, well-funded retirement is a lifelong process that requires pre-planning and commitment to a long-term goal. Yet once you reach retirement age, you can enjoy the benefits of a comfortable retirement in which you have more than enough money to cover your living costs.

Managing Your Retirement

When it comes to retirement planning, the earlier you can start in your career, the better off you will be.

The problem, however, is that most young people are not thinking about retirement. After all, when you are in your 20s or 30s, being 65 or older can seem like forever.

Even for older people, it can be daunting. While everybody would like to retire in comfort and financial security, the amount of time and complexity of creating a successful retirement plan can make the whole process somewhat intimidating.

Yet retirement planning often can be done very easily. All it takes is a little homework, an obtainable savings and investment plan, and the long-term commitment to preparing for your retirement years.

Why Retirement Planning Is Important

“Why do I need to plan for my retirement?”

That may seem like a simple question. But the answer can be complicated. The problem is that what most people think of when the picture retirement planning is either incomplete or not true at all.

For example, consider Social Security or other government-sponsored retirement programs. The fact is that they are not very reliable. Can you be certain that the money you expect to be there for you when you retire will actually be available? What happens if it’s not?

The fact is that people in developed countries continue to age. So logic alone tells us that there are fewer and fewer working age people contributing to Social Security and other government sponsored retirement programs every year.

A similar thing is happening with pension systems, such as those used in many European countries. While greater and greater burdens are being placed on these pension plans, more and more people are retiring and becoming entitled to payment. And thanks to advances in medical technology, people are living longer … and receiving their payments longer.

Something’s got to give!

Employer Contributions Changing

Defined-benefit pension plans are designed to guarantee participants a defined monthly pension from the day they retire until their death. This is the type of system many big companies used to create retirement funding for their employees in past decades.

Today, however, most employers have shifted to defined-contribution plans because of the higher liability and expenses associated with defined-benefit plans. This shift has increased the uncertainty of the future financial security of these programs.

So if governments can’t be relied upon to provide retirement funding for its citizens and companies are no longer providing the benefits that they used to, who does the burden of retirement planning fall to? Why, to you, of course!

How Much Do You Need for Retirement?

After you stop working, your expenses don’t stop. In fact, given the fact that you probably will be dealing with more health issues, they are likely to be higher.

So how much money do you actually need to fully fund a comfortable retirement? While an exact answer is impossible to give, there are some factors that should be considered:

Medical Expenses – If and when you become ill, you are going to want the top-quality medical services that are available. Most people don’t want to have to depend on charity or welfare. In the US, most older people are entitled to Medicare benefits. But this publicly funded program only covers minimal expenses. And there often is a gap between what the government will pay for and what you actually need.

Living Expenses – You are still going to have to live indoors, wear clothes, eat food, and have heat and fresh air to breathe when you are retired. All of these things cost money. Even if your mortgage is paid off by the time you retire, you are still going to have to pay property taxes, homeowners insurance, and maintenance costs.

Other Expenses – A comfortable retirement includes such non-essential expenses as entertainment, transportation costs, and other expenses that don’t fall into the other categories.

Add these all up, add the rate of inflation between now and your retirement date, and you have a general idea of how much money you are going to need for your retirement. Now all you have to is multiply that number by how long you expect to live!

Start Planning Now

Retirement planning is a process that takes decades of commitment in order to achieve the end result: The comfortable retirement you deserve. The concept of saving and investing money in a retirement fund may seem daunting, but with a few basic calculations and commitment to a realistic plan, you can achieve it.