To initiate retirement planning, you must adhere to some essential golden rules. If you are keen on planning your retirement successfully, then read this article to find out various ways to help you achieve your mission.
Retirement planning has its challenges. Most people don’t give it a second thought when they are in the prime of their life. However, not paying heed to retirement planning can land an individual in financial troubles when he/she retires.
If a retired person faces a problem such as a medical emergency or a property issue, then he/she needs to have financial support during these situations. Without enough savings, these incidents can prove costly. Thus, it is necessary for every person to develop a financial plan for life after retirement.
Here are some golden rules that you must pay attention to while planning retirement-
- Estimate Retirement Corpus
Post retirement years can be stress-free, if an individual accumulates wealth for at least 30 years. However, knowing the exact amount of financial corpus needed for such a long time is impossible. Thus, it is vital to calculate an estimated number.
To figure out the amount, you need to first decide a retirement age. Once that is determined, you need to roughly calculate your expected monthly and annual expenses that you will incur after retirement. Under these expenses, the most important factors are healthcare, house expenses, taxes, and insurance premium.
If you want to make this process more convenient, then you can take help of a pension calculator. This calculator is available online. It will generate an estimate retirement corpus based on your current age, current income and expenses, expected retirement age, and savings.
- Plan at a Young age
Many people ignore retirement planning when they are in the heyday of their life. However, contrary to what they think, planning retirement from an early age will make the job easier. Normally, financial liabilities increase when a person enters the 30s or 40s. Thus, their saving power can diminish over time. However, people in 20s have the luxury of time on their side.
It is recommended that you start retirement planning in your 20s to avoid blunders and generate a significant amount of retirement corpus.
- Turn Your Expertise to Your Financial Benefit
A lot of individuals enter a second career after retirement. Most of them use their work experience to fulfil the demands of their new jobs. For instance, a veteran reporter can support himself/herself by teaching journalism in college.
While this prospect may look exciting, it also comes with its challenges. If you are interested in a specific line of work, then research the changes the industry has undergone. It would be beneficial if you begin planning your new career a few years before retirement. To make yourself a desirable candidate, you can improve your networking skills, learn new technologies, pick up different skills, etc.
- Make an Investment Plan
Be it real estate, healthcare, or automobile, most of the sectors in India are becoming more expensive every year. Thus, a conventional investment strategy may not be your best bet to fight the rising expenses. It will be hard for you to generate a substantial retirement corpus if you only invest in FDs and RDs.
To be ready for future financial challenges, you need to pay more attention to your investment portfolio. First, you need to evaluate your risk to return ratio. Then, based on the analysis, research about various investment options such as stocks, mutual funds, insurance, etc.
Retirement planning can be hectic, but these rules can help you craft a potent strategy. However, the most important rule is to start early.