What is the primary purpose of a retirement plan?

The primary purpose of a retirement plan is to accumulate funds for retirement. Retirement planning involves setting aside money during one's working years to ensure a stable financial future when employment income is no longer available. This savings can come from various sources, such as employer-sponsored retirement accounts, individual retirement accounts (IRAs), or pensions.

Building a robust retirement fund is essential for covering living expenses, maintaining an acceptable standard of living, and achieving financial independence in retirement. As people are living longer and may spend many years in retirement, a well-structured plan is crucial to mitigate the risk of outliving one's savings.

Other options, such as saving for a new car, preparing for healthcare costs, or paying off student loans, represent financial goals but do not encapsulate the main focus of a retirement plan. While these goals may be part of an individual's broader financial strategy, they do not specifically address the need for securing one’s financial future after ceasing to work.