What is the primary purpose of retirement savings?

The primary purpose of retirement savings is to provide income after an individual stops working. As people reach retirement age, their ability to earn a regular income through employment typically decreases or ceases entirely. Therefore, having a dedicated savings plan allows individuals to maintain their standard of living and cover necessary expenses without the reliance on active employment. Retirement accounts, such as 401(k)s or IRAs, are specifically designed to accumulate funds that are accessible during retirement years, helping to ensure financial security and stability during a phase of life when income from work is no longer available. This approach is central to effective retirement planning, making it essential for individuals to contribute to their retirement savings throughout their working years.