The conditions of this race are affected by inflation, the stock market state, taxes and risks associated with money withdrawal.
Road to Everest
Making savings for retirement is like climbing Mount Everest. When climbing a mountain, a person should beware stones and boulders, cold temperatures can become another danger as well. From a financial point of view, these threats include market downfalls, emergency money withdrawals and fines for early withdrawals. These risks need to be hedged with higher return on investment.
Many experts do not realize that a person will face the same obstacles on the way down the mountain. For example; there may not be enough food or attention to dodge a falling boulder. In financial terms, these are the same risks as high taxes, market downfalls and inflation.
Descent of the mountain
Typical financial planning often concentrates on reaching the top of the mountain. The financial plans focused on savings only can fail on the way down. If a person has no fund allocation strategy, he can spend all his money in the first 10 years of his retirement life.
Life insurance becomes very useful. It protects family’s health and financial condition for many years and also provides passive income and its protection against inflation.
Since not all people have accumulated enough funds for retirement, they can pool their money with other family members under an annuity agreement. Only life insurance companies can provide guaranteed sources of income if you live too long. LICs always offer strategies to their clients that allow them to provide a stable income in old age.
Photos are from open sources.