Pension Plan

Pension Plan

Introduction

In life, nothing is more important than planning for one's own future or that of the loved ones. In live there are various luxuries like I-phone, LCD TV, Sports car, houses, and spending done to fulfill ones needs. Most of these are meant to fulfill the short-term needs of the person. What one should do is create a balance between the present spending and saving for the future. This balance should be there since what person is spending is from his present income, which when he retires will not be there to fulfill his needs (Bovbjerg, 2010). Our younger generation is not in the habit of spending, they fell that they have got to much time left in life and that they will think about their future after some time. Slowly and gradually, time passes and then they have to repent for the losses. Thus it is better to be careful from the very beginning, reduce the spending in the present time and plan for the future in the best possible way. Thus, it will save the person from the hard times, which he could have faced otherwise.

The most serious risk that comes in planning for the live is outliving your money. If this problem is found in people than they will have to work until the last day of their death or in other scenario, they have to live a life of poverty. With so much distress in social security and after the recession of 2008 the system itself is calling aloud that don't count on it too much (Gijsen, 2002). Thus, the person has to be very careful in selecting the right pension plan for himself and his loved one. He should select his pension plan in a way that after retirement it is able to cover his living expenses of more than 60 %. To avoid a scenario where one will have to face shortage of cash after his retirement, for that he has to plan in the best possible ways. He should write his or her desired goals and objectives. If the person has a partner than they should try to write a combined goal. The basic thing with writing up of the goal is the living standard which one lives in the present time and what sort of standard one would prefer to live in future after his retirement (Gitman and McDaniel, 2007). Thus, he should carefully decide what sort of contribution can he make in the present time to the pension plans and other retirement plans, the inflation which they may face in the future, the state that he would choose. Therefore, based on it future calculations will be done of which the present value will be calculated.

Discussion

These retirement planning in the form of pension plans have a great impact, both at the individual and group level. These positive impacts on people ultimately help the economy of the country and globally (Jasper, 2005). Thus, there is no reason that one should not ...