This is a very good question because retirement planning is yet another task in the long list of your financial tasks one needs to complete. And often, we consider retirement to be an alien concept because its quite some time away in most our lives, we tend to neglect it and treat it as unimportant.
However, the thought that one can live on his/her savings is a little far-fetched for normal middle-class people. A few reasons for this are:
- Deteriorating health- Ageing is inevitable and with that comes medical issues and medical emergencies. This is a fact one needs to come to terms with to plan retirement effectively.
- Inflation- If you don’t feel the pinch of inflation in your daily life, it might have something to do with you earning a steady income/ getting salary raises from time to time. But inflation is the truth of our lives and can threaten to throw all our finances off the balance once the pay checks stop coming.
- Absence of any stable income- All our lives we are used to getting an income from at least one source, if not more. Normal expenses, without including lifestyle expenses, can seem quite a drag in the absence of a steady income and can do serious damage during the retirement phase of life.