Why Retirement Planning is Important?

People should plan for their retirement savings from the early stage of their career. In a country like Bangladesh, job security, social security and increase in population put a lot of stake on a person’s growth in career. As future is not guaranteed and may hold more financial obstacles than in the present, it is important to plan ahead to live a secured life after retirement. 

Sometimes, it might baffle a person on how to save from current income source after meeting all needs. The trick is to start early and accumulate every possible bit of savings. Early start enables to benefit from the power of compounding even if the amount is very little.

Retirement planning should include the proximate time horizon of a person’s career span, estimating various income sources and expenses, calculating required after-tax return, finding means of different forms of investment to grow wealth and assessing risk tolerance. As retirement plan evolves through years, updating savings and portfolio is a crucial step in the process.

Steps included in the retirement plan:

  • Assessing income and future goals

People have retirement goals and it’s never nice to be dependent on others when a person retires. That’s why, estimating pensions, retirement withdrawals and deposits in the bank in the long run can head start a person into retirement plans. Also, not every day would be same. Thus, it’s extremely important to save as much as possible during good economic times. Setting goals help a person achieve target, prioritize and plan accordingly.

  • Build a complete actionable retirement plan

Personalised financial plan is a necessity in today’s age. Thus, calculating the future value of current savings is crucial. Also, the savings should not be disbursed at any cost unless it’s extremely urgent.

  • Reduce expenditures

As the world is getting modernized, new innovations are grabbing attention of people. As these products bring new definition to life, they equally cost a lot. Therefore, before making any expenditure, it’s wise to think crucially and not get burdened by wants rather focus on needs.

  • Learn about the benefits of social security, various investments and healthcare.

Different countries provide various benefits to senior citizens such as healthcare and social security benefits. Every citizen should be aware of the incentives that the government provides. This way it’s easier to have a diverse plan and get ahead with plans for the future.

Bangladesh is one of the most densely populated countries and the average life expectancy is around 70years. Without sufficient savings and good pension schemes, most senior citizens will be dependent of society.

Although Bangladesh doesn’t provide typical benefits like most developed countries, but the financial institutions and the pension system do avail benefits to the citizens. Banks in Bangladesh provide some benefits to senior citizens. In general, common features that come along for senior citizens with majority banks are lifetime free Debit Card, free internet banking, attractive discount on locker charge, free cheque books, interest calculated on daily basis and paid monthly, unlimited transactions, online banking facility across all branches and access to largest ATM network. To avail these benefits, the applicant must be 60 years old and above and a Bangladeshi citizen. There are other banks that provide increased interest rate more than conventional savings rate.

There is no formal pension system yet created in Bangladesh for the mass majority, except for only the employees in government services. Most people do not think about future and live on hand to mouth. This actually not only ruins the person’s life but also affects economy as a whole. Thus, the government should take steps to bring every employee from all job sectors under appropriate pension schemes to increase social security and ensure development of the country.