Finance, one of the most important aspects of everyone’s life, often gets neglected when it concerns long-term financial planning. While people are learning and becoming more aware of financial planning and maturity associated with long-term goals, it is still ignored by the majority of people. A huge reason for the financial crisis in the latter stage of life, typically acknowledged as retirement planning, mismanagement, or poor management, is certainly why a number of people face economic issues, leading to difficult lives. 

Shedding light on some reasons why people avoid retirement planning despite it being one of the most important aspects of life, we, as financial experts, are striving to uncover why some people fail to manage their money and live the end days of their lives poorly. 

However, to begin with, let us understand what exactly is retirement planning. 

What is Retirement planning?

A key aspect of financial planning, retirement planning is a systematic and long-term process designed specifically to ensure that individuals have the financial means to support themselves during their retirement years. It involves setting aside and or investing funds during one’s working years to provide a source of income and financial security after retiring from active employment. Being one of the most influencing elements, retirement planning is a crucial component empowering individuals to maintain their desired lifestyle, cover living expenses, and enjoy a comfortable and stress-free retirement. 

However, despite being such a crucial and impactful aspect, retirement planning lacks attention from the audience. While some consider it a selfish move, some individuals take retirement planning lightly because of unawareness and lack of financial literacy. According to a survey by LiveMint, around 80% of total Indian investors are unsure about their retirement planning. While 65% manage their finances personally, 20% consider professional advice. And amid this, a whopping 62% have started taking action, to begin with retirement planning, given they’ve turned 30.

According to data by Jagoinvestor, one of the biggest reasons people generally avoided retirement planning purposely was because it was too early to plan. Followed by retirement planning is an unwanted task, it is also considered as not one of the most important or prioritising tasks for some. 

To help you understand its importance and learn the importance, here are the top 5 reasons why people avoid retirement planning and make ways for pitfalls in the future. 

Top reasons why people avoid retirement planning 

Lack of awareness

Lack of financial literacy is the foremost reason for retirement planning negligence. Financial literacy, or understanding, comprehending, and making informed decisions about financial resources, is the foundation of successful retirement planning. However, a disheartening number of people lack this crucial skill. The rates of financial literacy are shockingly low, and the impact of this lack of knowledge is substantial. This lack of awareness, especially in financial management, often makes individuals struggle with well-informed decisions associated with savings, investments, and financial security.

Procrastination 

Procrastination, or no time for retirement planning, is a common reason. It is easy to put off tasks that seem distant or overwhelming, and retirement planning is no exception. The longer one delays planning for retirement, the more challenging it becomes to amass the necessary funds. While some think they are too young to plan for retirement, some simply think retirement planning is not worth the effort or energy. To counter this, it is important to consult with an expert and strategize with effective tips and tricks that help overcome procrastination. 

Fear of financial mismanagement 

Budgeting and making sacrifices is one of the most crucial aspects of retirement planning. These elements are not enticing and seem rewarding at first, especially when associated with retirement planning, but they are undeniably essential. The fear associated with creating a budget and making necessary financial sacrifices often leads to mismanagement, contributing to unnecessary chaos in the process of retirement planning. While some fear mismanagement, some are not able to save enough money as per the plan. This is actually fair considering the lifestyle, but such instances make it more difficult to streamline the retirement plan, often directing people towards negligence. Thus, making it important to narrow down a realistic budget for retirement, consulting with financial experts also helps understand the benefits of small sacrifices today that gradually yield long-term financial security.

Underestimating the benefits of proper financial planning 

Financial illiteracy is real. However, the emergence of a number of platforms, accessibility to financial courses, and the possibility of communication with financial experts have increased financial literacy among the masses comparatively, regardless of the seriousness of financial planning for different stages of life. People are often shortsighted and tend to ignore the long-term benefits of proper financial planning. While health can become a major issue with time, a number of different things can also contribute to the financial crisis. Underestimating the benefits of proper retirement planning leads to chaos caused by poor financial management in the early years of youth. 

Hopes and reliance on family and children 

Often considered a selfish move, people believe in ignoring retirement planning consciously while directing the funds toward their family and children’s future. While retirement planning is like social security chosen by people who want to secure their future, the majority of individuals, now close to retirement, choose to rely on their family and children. In other words, people think about how they have made efforts to strengthen their family and children’s future by working hard during their time and thus, expect the same from the family for them post-retirement; regardless of the success ratio, it is a risky strategy. While there are a number of options available to secure retirement income, like investments, pensions, and savings, it is only ideal to depend on oneself rather than burdening children in the present or in the future. 

Retirement planning is a significant part of life that is often overlooked. The consequences of avoiding it are dire, as many individuals find themselves struggling financially during their golden years. While understanding some common reasons to avoid retirement planning, we at YS Financials, as financial experts and retirement planning consultants, also help you with effective solutions and plans that impact life choices in a positive way. If you haven’t considered retirement planning or financial planning, take this as a sign and connect with our financial experts now. Seek professional financial advice to tailor your retirement plan to your unique circumstances and enjoy the latter phase of your life in the best possible way without an ounce of stress. 

FAQs

• When can I start retirement planning? 

You can start retirement planning as soon as you begin earning income. Ideally, the earlier, the better. The power of compound interest can significantly boost your savings over time, so even in your 20s or 30s, it is a great time to begin. However, it is never too late to start; if you haven’t started already, connect with our financial expert at YS Financials and start as soon as possible. 

• How much money do I need to retire comfortably? 

The amount you need for a comfortable retirement varies widely based on your lifestyle, location, and other factors. A common rule of thumb is to aim for 70-80% of your pre-retirement income. It is advisable to work with a financial advisor to calculate a more precise estimate tailored to your individual circumstances and goals. 

• What are the best retirement investment options?

The best retirement investment options depend on your risk tolerance, financial goals, and time horizon. Some common options include: 

• LIC
• NPS
• Mutual funds and exchange-traded funds (ETFs)
• Stocks and bonds
• Invest in Life Insurance(Retirement Plans)
• Annuities

Diversifying your portfolio across various asset classes helps manage risk and increase your chances of a successful retirement. However, consulting financial experts helps understand the best-suited options in a better way. Connect with our financial experts and draw a retirement plan that helps you rest assured with relaxed retirement time. 

• What happens if I haven’t saved enough for retirement? 

If you have yet to save enough for retirement, you may need to make adjustments to your retirement plan. This could include working longer, reducing your retirement lifestyle expectations, or finding additional sources of income. A number of government programs also provide some support, but it is also essential to save and invest for retirement to maintain financial independence in your later years.