Retirement planning (stages of planning for retirement)

Have you ever wondered why most people are subject to a life of abject poverty after retirement? You might wonder what happened to all the money they made while actively in the workforce. How did they end up poor after retirement?

The bitter truth about life is that no matter how rich, poor, young, old you might be, or how hardworking, efficient, calculative, or productive you might be, a time will come when you won't be able to work again due to old age. You get to retire and take the back seat in life in terms of making money. 

What is retirement?

Retirement is the stage in life when you permanently leave the workforce and stop struggling to earn money (end of hustle, as popularly known on the street). 

To some people, this is the time they start enjoying life, touring around the world, and exploring the beauty of nature, while to some, this is the time they depend on their children or relatives to take care of them. While to some, this is the time to rely on the Social Security Administration (SSA) for survival.

Whichever category you want to be in your retirement age, there is no better time to decide than now. If you want to be among the folks that enjoy life or struggle to survive after retirement, you need to start taking steps towards it now.

Although the retirement age varies in different countries, according to Wikipedia, the retirement age in the USA is 62, while in the UK, it is 66, etc. Therefore, whatever the retirement age is in your locality, the earlier you start the preparation, the easier it becomes to achieve your retirement dreams.

Retirement planning starts way before you retire. However, some start their planning immediately after they join the workforce.

Stages of Retirement Planning

Like I said earlier, retirement planning starts way before you retire. So many dreams of their retirement age after years of hard labor, but they forget it takes more than just dreaming and requires adequate planning at different stages of life.

According to a survey in 2019, 64% of Americans are not planning and preparing for retirement. Don't be among the 64% and start planning now. Listed below are the stages of life to start planning for retirement.

Early Adulthood

Adults in this category fall between the age of 21 to 35 years old. This is a stage where adults that fall into this category don't have enough money to invest but what they have at this stage is enough time for the investment to mature with the power of compounding interest.

Compounding interest allows investors to earn accumulating interest on investment over time. Since adults in this category have enough time, compounding investment interest is an excellent way to start planning for retirement.

Middle Adulthood

Adults in this category are between the age of 36 to 50 years of age. This is a stage where there are many financial obligations, ranging from insurance premiums, and mortgages, to children's education, etc. Despite the numerous financial obligations at this stage of life, it is important to continue saving for retirement because all these obligations might distract you from saving for your retirement, which is not a good financial choice.

You might want to consider a 401(k) or an IRA, as both can serve as tax relief to the investor. Don't forget life insurance, which will secure your family's survival without affecting your retirement savings in case of unforeseen circumstances.

Late Adulthood

Adults in this stage are between the age of 50 to 65 years of age. At this stage, you are running out of time as retirement age is near, and you have fewer expenses. Although your salary will be higher, coupled with fewer financial obligations, you should have enough money to invest in this short period.

This is the best time to add and increase your investment portfolio or set up one if you don't have one. In addition, people at this stage can begin to enquire about the social security benefits and the best retirement age to boost their social security benefits. 

This is also the best time to plan for future health care insurance to cover your health-related expenses after retirement.