Life is expensive and complicated. Whether it is for food, housing, children, or even just putting money away for a rainy day, it soon adds up, and unsurprisingly, there are large numbers of people consistently struggling to make ends meet. Putting money away towards pensions and retirements is one of the most common savings worldwide. Quite often, a bit of financial security can go a long way to making the future seem brighter and more manageable in the long run. Whether you live on your own or with other people, your finances will have a large bearing on the rest of your life.
Positives of future planning
Whilst it might not be the most fun thing in the world, having a plan for the future can be of great benefit. It doesn’t have to be set in stone, but it can help you to remain in control of your own financial wellbeing whilst also keeping one eye on any surprise developments in your life. This could be any unexpected health issues or pregnancies, or it could be a nice little nest egg in case you are trying to get onto the housing ladder. Just having some money in reserve can be a godsend, especially in the current financial climate with companies struggling left, right, and center due to stop-start lockdowns. Nevertheless, just giving yourself that peace of mind and security can do the world of good. It is important to start thinking about pensions as soon as you begin working full time. If you consistently put money away over a long time, it can work out better in the long run as logically, there will be more available for when you eventually retire. In an ideal world, planning wouldn’t be so important, but quite often, it is the best chance you have to give yourself a better future. All you can do sometimes is do the best you can and hope for the best.
Facts and figures
Depending on where you are based in the US, the cost of living can fluctuate by the state as some places are likely to be more expensive than others. As an example, the average wage in Ohio is $49,430, with the monthly rent standing at $1,113, meaning that every dollar you earn is essentially worth $1.12. By comparison, the same criteria in New York would see you pocket $63,970, with each dollar being worth 87 cents with rent prices standing at just over $2,000.By looking at these figures, it shows just how much money Americans are parting with on a month-to-month basis and underlines the need to plan ahead to ensure that you aren’t left short when it comes to retirement. Even when you look at taxes, the average American was spending roughly 24% of their salary on tax in 2019, meaning that based on earnings of $15,000, they would be taking home roughly £11,400, having spent $3,600. Although it doesn’t seem that much on paper, over time, it could soon rack up over time as you are essentially giving away a quarter of your wages to taxes every year. With medical costs climbing every year, it is not surprising that some people struggle when it comes to paying the bills in an emergency.
The cost of retirement
Retirement comes with its own set of financial challenges. The drop in income can be hard to adjust to initially, and it can also act as a shock to the system as you go from working everydayto having to find ways to fill the time. The majority of over 60s in America receive income based on a three-legged stool system which includes social security, pensions, and savings, all of which help to maintain some form of financial stability in retirement. Of these, almost 90% of older Americans rely on Social Security to prop up their income as they face up to the huge loss of full-time working hours. Unfortunately, this only makes up an average of 40% of their regular working income, whilst experts recommend that a more realistic figure should be 70% to help people to adjust to their new lives. This loss of earnings can make it harder if living alone as it can require lifestyle adjustments to avoid running into debt and causing unnecessary strife, especially in the case of unexpected medical or financial expenses.
Assisted living tax deductions can help to offset some of these concerns as medical bills can put a serious dent into your finances. By moving into an assisted living facility, you can write off some of your taxes, and medical bills are often some of the highest globally, which once again puts a huge strain on your finances. As an example, a heart bypass in America costs $78,100 compared to $32,010 in Switzerland for a similar procedure. Just being able to write off some of it through tax-free care can be a lifesaver in more ways than one as it takes the financial pressure off of you so that you won’t be panicking as much if you were to fall ill unexpectedly. That peace of mind can be crucial in the long run as it makes life simpler and can remove a burden from an already hectic life.
Whilst there is a lot more to your finances than just how much tax you pay, Your finances will impact every aspect of your life, whether it is while you are young or whatever you have put away for your later years. By giving yourself a strong base to work from financially, you can make the transition easier when it comes to it, and it can also help your loved ones as you can be ready if they were to encounter any surprise difficulties. More importantly, it provides an opportunity to fight back at whatever difficulties life throws at you, and you can face them head-on.