Question

Discuss why financial planning is important, and why you believe so many people don't have enough saved for a comfortable retirement.

Make your initial post by Tuesday. Respond to at least two other postings, follow-up, reply to anyone who replies to your posts, and read all your classmates' original postings by Sunday.

Answer 1

Reasons why financial planning is important:

1. Inflation: It is a decrease in the value of money and is a destroyer of purchasing power. Financial planning helps to sustain inflation.
2. Long term goals: A person may have a number of goals such as purchasing a house or children’s college education. Financial planning helps to meet these long term goals.
3. Emergencies: Financial planning helps to meet unexpected and unavoidable emergencies such as an illness or sudden death and helps in providing security to the person and his/her family.
4. Retirement: Financial planning helps to create an adequate sum for retirement when expenses increase and income is drying up. It helps to create a comfortable retirement.
5. Investment: A good financial planning helps to identify a person’s risk appetite, objectives and risk tolerance. It helps to choose the right investment that fits the person’s needs and goals.

Lack of savings by retirement is a notable feature in America. People with high income have good savings for their retirement. But those with lower income have no savings and plenty of debt. People with higher income can also have low savings if they had a high standard of living and made expensive purchases close to retirement. It is also because some do not make enough to save for retirement. Many times it is simply because of the lack of education and understanding on the importance of retirement savings.

I hope that was helpful :)