By African Unity Life
Saving for retirement is extremely important. Just ask any financial advisor. However, you may not know exactly why you need to save for retirement. There are costs you need to factor in when it comes to your golden years. And if you want to enjoy your life after work, it is important that you factor in these costs. Some of these, you should ideally be paying for already, in preparation.
Caring for your health should always be a priority. However, as you grow older, you will likely need to care for your health a little more. As your body ages, more problems arise and you need to deal with these. And with these problems, come medical costs. The first step is to increase your healthcare coverage. This means that if you are on a hospital plan, you may need more comprehensive cover. This will cost more each month, but, at the same time, it will save you money in the long run. You will likely need to visit the doctor for checkups more often than you ever have before.
But, here is the thing, you also need to have your own savings for healthcare. You may need to see specialists who will probably require a co-payment, depending on your medical aid or health insurance policy. It is also a good idea to have gap cover at this time of your life as it will also save you money in the future. As the name suggests, it covers the gap between what you are being charged for certain medical treatments and consultations, and what your health cover will pay for.
Funeral policies are important at all ages, however, they become more important as you get older. If you have funeral cover for your parents, you already know the value in these policies. So, why wouldn’t you have one for yourself in preparation for your golden years? Of course, anything can happen at any time. However, unfortunately, you are more at risk as you age. It isn’t the nicest thought to have, but it is a necessary one. You don’t want to leave your family having to deal with the costs involved for a funeral while they are mourning your passing at the same time. This cover is especially valuable if you are the breadwinner of your family.
The rising costs of living
Whether you plan to retire at age 55 or 65, you need to be aware that the cost of living will increase. However, the money you have saved for retirement may not earn interest in line with this. This is why many people choose to invest for retirement instead of saving. You need to factor in that the cost of food, petrol and other everyday living expenses will go up. This means that you need to save or invest for retirement with this in mind. You want to be able to enjoy these years when you no longer have to work. And that takes money. You don’t want to have to worry about financial security instead of simply living your life. Stress, after all, can cause health issues, and your retirement is meant to be the start of your stress-free years.
There are many costs involved with ageing and your retirement savings need to cover these. The above includes just three of the costs you need to prepare for. It is advised that you have invested 25 times your final annual salary by the time you retire. This is not to scare you, but rather to help you understand why it is so important to set aside the right amount of money for those years in which you will not be receiving a salary.