Saving for retirement is always a smart idea but if you think just by saving you will become financially successful than you are wrong. It takes a lot more than just saving and involves some strategic planning and smart use of your money.
Don’t get me wrong, saving for retirement is very important but it will not ensure financial independence.
Your advisors will try to convince you that putting your money in some form of savings account is the best method for future financail measures. In the real world, it is incredibly hard to save enough to actually live comfortably in the future. It could take more than a lifetime in some cases and we don't have that long to wait.
In general, a retirement plan will give you less to live on during the retirement years than what you are used to earning or living on when you worked. It often takes a lifestyle adjustment and some time to figure things out but it is doable.
So then, what is the point of saving?
Here are three reasons:
- In case of emergencies, it is very important to have a growing fund when something goes wrong (For example, your car breaks down, you need to travel unexpectedly, you have unforeseen medical costs, etc).
- Saving can help instill discipline, which is important for wealth creation.
- If you can generate extra money, you can develop passive income.
For sure, knowing how to save properly is of the utmost importance for your finances. It will help you be more secure in the future. The other side of the story involves what to do with your savings.
Think ‘investment return’ or increasing what you already have. If you can’t expand on your savings, then the method you are following for wealth creation is not good enough. This should be main focus of your savings method.
So, should you save for retirement?
The answer is YES! Save for retirement but make certain that you are using the correct strategy (investing!) to make sure you reward yourself with a great return in the end.