Why plan for retirement

- So let's think a little bit about retirement. And I know some of y'all who are younger, like, hey, I'm just trying to figure out what to do with my own life. Why am I already thinking about my life when I am in my 60s or 70s or even later? The first thing I'll tell you, life will go by faster than you suspect. I'm not at retirement yet, but I'm about halfway. And that, that first half went awfully fast. And, but the more importantly the earlier you start thinking about it, the more likely you're going to be in a situation that's a good situation when you get to retirement. So the whole principle is when you're in your 60s or 70s, you might not wanna work. You might want to see the world a little bit. You might wanna spend more time with your family or you might not be in a position to work. Your health might start going in certain ways. And so you want to have a cushion to live off of. Now, one consideration is, is that people are living longer and longer and longer, which is a good thing. But in the old days when the life expectancy was 65 or 70 and people retired at 65, well then on average they only had to think about, well how am I gonna live for that? How am I gonna support myself for those five years? But now folks are living into their 80s, 90s and even beyond as healthcare gets better. And so now if, if you're fortunate your retirement might be decades it might be 20, 30 years or longer. Now that's a double-edged sword because healthcare is getting better but healthcare is also very, very expensive. And so you need to think, how do you pay for that? You might have to think about things like inflation. Everything is getting more expensive over time. Some of you might say, hey, there's government programs there's government healthcare. You have things like Medicare, you have social security that you're paying into, but you really don't know when you retire in 30, 40, 50, 60 years whether those programs are going to be the same. And to what degree are those programs able to actually help support you? So saving for retirement is a very, very important thing. But some of the core principles that we talk about saving generally apply. So you should try to live below your means, spend less than you bring in. You have that savings. Now, some of that savings could be for things that are in the short term. It could be a safety net in case you lose your job, in case you fall ill, in case you have some unforeseen expenses. It could also be for buying a house or buying a car. And it could also be for investment. And if you start saving and you invest now, one, if that investment's not something that you want to touch for 30, 40, 50 years, you could probably deal with a little bit of ups and downs, what's often called volatility, a little bit of that risk. And so if you invest it over many, many years, whether it's in something a little bit riskier like stocks or something safer like bonds, that interest that compounds year after year, it will become a significant addition to whatever you directly save over the coming decades. I encourage you to watch videos on Khan Academy about the power of compounding interest and things like that. But it is a lot. If you save a hundred dollars when you're in your twenties and it compounds at four or five, 6% per year that will be a lot more than a hundred dollars when you get into your fifties, sixties and seventies. So start thinking about retirement. It's never too early. And you know, worst case you think about retirement you start saving up for it. That money that you're saving up can be used for many, many, many different purposes depending on how you're saving it. You also have things like retirement accounts like 401Ks and IRAs, which we'll talk about later which allow you to save for retirement in a very tax efficient way. So we'll talk about that in more depth in other videos.