Reasons

There are many reasons to invest for retirement. The biggest is to establish a source of income for paying basic living expenses, including property taxes, food, home improvements and the costs of an automobile. Retirement investments can also supply money for discretionary spending. Finally, it’s important to have money set aside for expensive medical needs that may occur later in life.

Other Sources

Besides investment income, planning for retirement should include money from other sources as well. Social Security benefits are based on a worker’s earnings over the course of an entire career and will provide a steady source of income to pay for some basic expenses. In addition, some retirees may be eligible for disability pensions, which can also be figured into future budgets.

Risks

Each type of retirement investing carries its own risks, which should be figured into the plan. Employer retirement plans have little risk, but also grow slowly and require regular contributions from the worker. Government bonds are a good long-term investment, maturing in a specified amount of time such as 10 or 20 years. Stocks and real estate represent some of the highest risks, offering the chance to multiply the investment quickly but they are subject to market trends that can quickly reduce the value of the property or company.

Benefits

References

Resources

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