Category: Retirement Planning

Retirement planning is not for those who have retired, in fact, it is for the fresher who has just got a job and has started earning. Of course, the young people are a little apprehensive about planning for retirement and may laugh about it. They love to spend at this age, and there is no pressure of old age issues for them. However, one has to spend carefully, even at a young age where there are no pressures of any kind.

Following are some of the tips that need to be followed for retirement planning which will help you live better and live happily without being a burden on anyone.

1. Save 10%-20% of your income

The very first thing that you should consider is to keep aside around 10%-20% of the income every month. This forced saving will further help you see a large amount during the retirement years. Suppose a 25-year-old person saves a fixed amount every month, the savings in five years will be 44% of total corpus when the person turns 60. The early you start, the smaller is the amount you need to invest. However, the older you grow, the amount will be halved as you need to save more with almost 20 to 25% savings of your income.

2. Increase in salary means an increase in investment

After a year, when your salary increases, you should also increase the saving or investment as well. Of course, you have to take into account the inflation and other factors too. Based on your needs and lifestyle, you will definitely have to increase the savings. If at the age of 28, the salary is around Rs. 50,000 and the saving is Rs. 5,000 per month, the total will equal to 92 lakhs by 60. So if there is an increase of 10% every year the savings should also be accordingly. This means by 60; the person has around 2.76 crores.

3. Don’t touch corpus

This is an important tip. Everyone thinks it is not necessary to keep aside such a large chunk of money when you really need it. When you withdraw any little amount, it will certainly have the effect of the compound, but the same amount can do wonders when you retire. Most people are impatient and reach out for the corpus, which can damage the retirement plan. Even when changing the jobs, you should transfer the PF and not withdraw them or use them.

4. Education and retirement connection

A parent always thinks of saving for their children instead of their own retirement. Of course, there are various  needs for their children to be fulfilled such as education, wedding etc. This also shows the picture that they are not really aware of their own needs and spend all of it on children. Dipping into the retirement fund for the needs of children is going to be risky. The best thing here is to get a education loan. Loans today are easily available for education . Even the EMIs are going to be easy to pay out. So instead of tearing the PF, get the loan.

5. Get rid of loans

Before you retire, you should get rid of all the loans and plan for it accordingly. You should not look at the corpus for repaying the loan. This will definitely wreck your entire retirement plan if you take out a large chunk out of the savings.

6. Determine how much you will need

Of course, it does differ but get ready for more. The inflation and other sudden expenditure will definitely affect the savings. So be ready for emergencies as well. Suppose your current age is 30 & your monthly household & lifestyle expenses is 25000 then your future value would be 190000 pm after 30 year. (assuming 7% inflation) So you need to accumulate total corpus of Rs. 5 Cr.at the age of 60.

People usually fail to plan their retirement due to lack of financial knowledge and emotional biases in managing their own money. It’s strongly recommended to visit a financial planner to get a comprehensive financial plan made for you and your family.

 

 

 

 

 

 

 

 

 

 

We all need to and want to plan for our retirement. But, are we ready? Are we going on the right path and investing wisely? Well, these questions are sometimes very daunting and to top it all, we do get a lot of advice from various sources which can be taxing! Retirement plans are very crucial and should begin right from the moment one starts earning. Well, if it is delayed, never mind, there are still ways that can help you save and have a good retired life. But, are you ready for planning or are you still contemplating? One definitely needs to have a defined picture about it as to how and when and then figure out the right plan.

Why retirement planning is important goal

The times are difficult as we all know, and they are going to be difficult once you stop earning that is when you retire. Your expenses are not going to reduce just because  you are retired, or nobody is going to give you that kind of salary due to your age. There is the inflation, the interest rate, health issues, medicines, and the lifestyle that influence the expenses. The life span has increased and with it, there are several issues that need to be tackled. Are you retiring by choice or is it by force? That is if you are a government employee, you will definitely retire when you are around 60 or even less. Maybe you might take up another job, but, of course, the salary will be much less. Is there anyone who can provide you with finances if you truly need them? Do you own a house or live with your children? There are some questions like these that will help you get a clear picture. But, I must say, you must be realistic and think practically. You need a good retirement planning before you retire so that you are ready to retire and have a peaceful life without depending on others for your basic needs.

Points to consider for retirement planning

What is your income?

Whether you are in business or an employee, you still have an income and also expenditure at the age when you cannot work anymore. So calculate and consider if you can save anything from it. How much do you spend? Calculate all this and check how much you can save today and how much you will be spending after retirement and what your expenses will be. Try projecting for around 5-20 years and more which can be impossible to track how much you will need in the future. Taking your present income and the expenses, the savings should be enough to suffice your lifestyle. But, when there is no income, things can be difficult. A plan that includes your income as well as expenses should be chalked out. Think of other expenses that you might need like a vacation, children’s marriage, education, house, car, other expenses like domestic and unknown.

Best retirement planning

The best retirement plan should be a mixed asset plan. Your portfolio should be based on the age of retirement and your income. It varies according to different income scales, and that is why there is no single plan. Every retirement plan is different based on the lifestyle and needs. There are various considerations and investment assets that can help you benefit right from the present day till you retire. The best way is to approach a professional financial planner who can prepare financial plan for you according to your income, expenses, liabilities and also how many years you will be working till you retire.