Why should an individual accumulate retirement wealth?

Why should an individual accumulate retirement wealth?

by 5paisa Research Team Last Updated: Apr 04, 2022, 03:25 PM IST

Any individual who is planning for his/her retirement has to follow the process of wealth accumulation to achieve the end goals.

Wealth accumulation is the process whereby the savings of an individual are used to build up a corpus that will result in a source of revenue over the next several years. Wealth accumulation means increasing the amount of capital with the individual so the amounts here are used more effectively and this becomes a corpus that one can expect support from in the days ahead.

Spending and wealth accumulation are the opposite ends. Spending becomes an obstacle to the retirement planning process as it takes away the amounts that could be used for wealth accumulation. One cannot stop spending but can cut down their spending habits. Excessive spending can lead to a financial crisis in future.

There are various benefits an individual gets when he undertakes wealth accumulation. They are as follows:

  1. It becomes a source of income for individuals and families during the sunset years.

  1. Here there is a build-up of the wealth of the individual by regular process.

  1. It brings him closer to the aim of retirement.

  1. The amount generated from here becomes a backup and safety net for the individual.

  1. Adopting a different kind of wealth accumulation can help an individual to get closer to all of his life goals including retirement planning.

Who needs to undertake wealth accumulation?

Any individual who is undertaking the process of retirement planning has to follow the process of wealth accumulation to achieve his goals. This has to be used carefully so that the process is carried smoothly. Most people feel that retirement is a long time away, and they can plan accordingly when the right time comes. After this stage in life, current problems seem to be high and hence these will occupy centre stage for investors rather than the problems some years down the line. Hence devote more attention to tackling those problems.

Everyone should start retirement planning the day they start earning. It will take decades to complete retirement planning. Any sum of money is fine to start retirement planning. You need to have a corpus in crores to retire without a problem and enjoy the later years of your life. But this is possible only with the help of wealth accumulation. Every person, no matter what is the age and condition are, needs to undertake retirement planning. The process of wealth accumulation has to be linked to all the activities at various stages to get the required results.

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