What risk does a retirement plan primarily address?

A retirement plan primarily addresses the risk of insufficient savings during retirement. This is a critical concern for individuals planning for their retirement years. The essence of a retirement plan is to ensure that individuals save and invest sufficiently throughout their working life so that they can maintain their desired standard of living once they retire.

As individuals prepare for retirement, they must consider how they will cover their living expenses, healthcare costs, and other expenditures without a regular paycheck. A well-structured retirement plan helps accumulate the necessary funds to mitigate the worry of running out of money during retirement. It focuses on building a robust financial strategy that encompasses contributions to retirement accounts, investment choices that can allow for growth over time, and withdrawal strategies to sustain income during retirement.

While market volatility, inflation, and tax rate changes are important factors to consider in the broader context of financial planning, they are secondary to the fundamental goal of ensuring that sufficient savings are available to support an individual's retirement needs. The primary focus remains on accumulating enough wealth during one's working years to secure financial stability in retirement.