Benefits of having a retirement plan

It is rightly said that the best time to start planning for retirement is when you start working. But the next best time is now. Everyone needs to plan for retirement.

Retirement planning is the process that will set you up for a successful retirement. As it is rightly said by John Lennon, “Life is what happens while you are busy making other plans”. It becomes important to have a retirement plan in place as it is the only phase post first job wherein you have low to no regular income like salary. So, following are the benefits of having a retirement plan.

1. Helps to remove the fear factor
Having a retirement plan helps you to tackle the fear factor regarding your savings and in turn your survival in retirement. Usually, a retirement plan would show you all the probable outcomes which can help you to make necessary provisions prior to your retirement.

2. Understand cashflows
A retirement plan, based on certain assumptions, would help you to understand how your retirement cashflows would look like. This will help you know whether with the current setup you are able to maintain the desired lifestyle or not.

3. Dedicated action plan for distribution
There are two phases; one is accumulation phase wherein you would accumulate wealth which would help you in your retirement and distribution phase is your retirement phase wherein you would be drawing a certain amount periodically to maintain your lifestyle and let remaining amount grow. So, retirement plan helps you know how much you would need in retirement and how much you need to save for it.