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Why Financial Planning is Required To Attain Financial Freedom In Retirement?

why financial planning is required

Most people fail to understand why financial planning is required for a secure future, especially for achieving financial freedom during retirement.

Financial freedom refers to when you can spend your money without worrying about the consequences. When you do not have to think twice before spending your money, and you do not have to compromise on your lifestyle. It means you have the “freedom” to use your money as and when required without worrying about working every day to earn.

You might be earning a decent amount or a lot of money today, but that alone does not guarantee a secure future. If you end up being reckless and do not plan for your retirement phase, you might end up facing struggles. 

Numerous factors can be a threat if you do not take timely action and act accordingly. Let us explore what these threats are and how they can be harmful to your financial freedom in your retirement days.

Most Common Threats to Financial Freedom in Retirement


Inflation translates to an increase in prices and a decrease in purchasing power. The prices of everything are continuously going up while your income is probably not! If you do not have enough income and returns on your savings that can surpass the inflation rates, it can be a serious threat to you. 

One cannot calculate the exact cost of living in the future, which means you will have to have an increased income and a high return investments, or else you might end up facing the consequences.

Not Earning Enough 

One should follow their passion and not entirely work for the “money” factor. But we all know that without money, there is no survival. If you don’t earn enough to meet the needs of today shortly, how will you plan for your retirement days?

Earning a good amount of money that leaves you with decent savings is vital for survival in the future, especially in retirement days when you are not earning a stable income but are highly dependent on your savings. That is why financial planning is required so you do not end up exhausting all your savings.

Healthcare Costs

Health is a factor that can be a threat to your financial freedom. The expenses that one has to bear for health treatments and medicines are too high. If you do not invest in your health, it can lead you to serious health problems. One can even lose all of their savings in case they end up getting diagnosed with any health problems. 

Not taking proper care of your health, not exercising, eating unhealthy all the time, and not getting regular health checkups, etc., are the acts that can direct you to an unhealthy life. 

Ignoring investing in good healthcare plans is also an aspect. Healthcare plans help you save so much on healthcare expenses, and hospital bills can easily get covered. But people choose to ignore it as they feel they do not need any healthcare aid since they happen to find themselves healthy and fit.

Wrong Investment Decisions and Debts

Not taking the right investment decisions during your career can lead you to live a risky retirement stage. Taking up too many debts, not paying off credit bills and loan payments, or continuously investing in the wrong stocks and low-interest savings plans is the sign of poor investment decisions. 

Not investing in tax saving plans, investing all your money in a single financial instrument, or not keeping money aside for life events like marriage, education, etc., are the reasons one may face difficulties living a satisfactory retired life. It is another reason why financial planning is required for financial freedom during retirement.

Unforeseen Life Events

Life is unpredictable, and one may or may not be prepared for uncertain events. There are times when emergencies arise or unforeseen circumstances generate out of nowhere. Health emergencies, thefts, accidents, running out of savings, stock market investment risks, damages due to natural disasters, etc are some circumstances that one cannot predict or avoid. 

If one doesn’t have a separate cash reserve for such circumstances, it can lead to a difficult time living through your retirement phase. 

How to Ensure Financial Freedom in Your Retirement?

To achieve uninterrupted financial freedom, one must take the essential measures as soon as one starts generating a stable income. Here are a few tips that can help you attain financial freedom during the retirement phase.

Make a Proper Budget

Budgeting is important. Planning how much of your money goes where and how is vital. You can start budgeting your money by classifying your spending and expenses into various sections like groceries, investments, educational fees, rent, bills, repairs, etc. 

You must have complete knowledge and control of the daily inflow and outflow of your money to achieve financial freedom after you retire.

Spend Less and Save Money from an Early Age

As much as you would love to spend your money to buy your favorite things, it is also important to start saving a particular percentage of your income for your future goals, especially for retirement. 

Spending on necessary items and upgrading your lifestyle is required but you must avoid spending too much or too often on luxury or unnecessary items which are of no benefit to you. Saving is important no matter how much you earn. Your savings will also help you meet the ends in case of any emergencies.

Invest in the Good Plans to Beat Inflation

Investing your money is important, especially when we know inflation rates are continuously increasing. Inflation is the primary reason why financial planning is required for the future. You must invest your money through multiple investment options like properties, stocks, mutual funds, and fixed-income plans that offer high-interest rates and compound interest on your money. 

Investing in several strong stocks and mutual funds can be the savior when invested for a long period. There are several tax saving plans and retirement plans that, if invested correctly, can help you live a tension-free life after you retire.

Pay Off all your Deficits/Debts as Earlier as you Can

Debts can help you in the meantime but they aren’t your best friends. Be it credit card bills or educational/mortgage loans, you should clear off all your debt bills as early as you can. This will lower your financial and credit risks and you can finally start building your wealth by saving your hard-earned money. 

Reach Out to a Financial Advisor to Plan for your Retirement

A financial advisor will guide you on the right path to plan for your financial freedom. They’ll help you pick the most beneficial long-term savings plans. A financial advisor knows why financial planning is required and has an understanding of all the financial instruments available. They can aid you in profitably diversifying your financial portfolio.

Take Care of your Health

Health is indeed wealth! Maintaining a healthy lifestyle and staying fit is significant so that you can lead a disease-free and happy life. A person’s health is the most important and that is why the healthcare costs one has to bear are way too high. 

Investing in your health from the start will help you save on those high healthcare expenses and you can enjoy your retirement days with full zest and financial freedom.

Understanding why financial planning is required and taking all these important actions can help you live a stress-free and pleasant retirement life with comprehensive financial freedom.
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Why financial planning is important?

Understanding why financial planning is required is the first step to building a secure future. Financial planning helps you in achieving financial freedom. You can enjoy your life without worries and risks and independently.

How to achieve financial freedom?

You can achieve financial freedom by budgeting your finance, investing in good financial instruments, spending less money, saving money separately for emergencies and major big events in life, paying off debts, and taking good care of your health!

Are financial freedom and financial independence the same thing?

Many people get confused that financial freedom and financial independence are the same things, but that is not true. Financial independence means that you are not dependent on anyone else for your expenses and can afford the lifestyle and everyday expenses while continuously earning.

Meanwhile, financial freedom means that you no longer have to limit yourself from spending and you can upgrade your lifestyle without generating a regular income.