Pension planning refers to the process of saving and investing money during your working years to provide income during retirement. It involves setting aside a portion of your earnings and choosing appropriate investment vehicles to grow your retirement savings.

Pension planning is important because it ensures financial security and independence during retirement. It allows individuals to maintain their desired lifestyle and cover expenses such as healthcare, housing, and travel. Without proper pension planning, individuals may face financial hardships in their later years.

It is recommended to start pension planning as early as possible. The earlier you start, the more time your investments have to grow. Starting early also allows you to take advantage of compounding returns, which can significantly increase your retirement savings over time.

There are several types of pension plans, including employer-sponsored plans such as 401(k) and 403(b) plans, individual retirement accounts (IRAs), and government-sponsored plans like Social Security. Each type of plan has its own rules and benefits, so it’s important to understand the options available to you.

The amount you should contribute to your pension plan depends on various factors such as your age, income, and retirement goals. A general rule of thumb is to save at least 10-15% of your income for retirement. However, it’s best to consult with a financial advisor to determine the appropriate contribution amount for your specific situation.

If you don’t have a pension plan, you may have to rely solely on government benefits like Social Security, which may not be enough to cover all your expenses during retirement. It’s important to have your own retirement savings to supplement any other sources of income and ensure a comfortable retirement.