How to plan a retirement in India
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Tips for a Happy Retirement
Instead of keeping your saved money in a piggy bank, invest it in a blue-chip stocks. This helps your money grow over time.
As you save and invest, your money grows and becomes a retirement fund. Think of it as a big money bag you can dip into when you retire.
You plan how much money you’ll need when you’re not working. This includes daily expenses, healthcare, travelling, and fun activities.
You budget how much money you should have in your retirement days to cover all these.
When you feel you’ve saved enough and can comfortably live the rest of life without working, you can retire. This means you stop working and start enjoying your rest of the life.
Even in retirement, you need to be careful with your money. You should not run out. So, you keep an eye on your expenses and adjust if needed.
Retirement planning is about making sure you have enough money to enjoy life and take care of yourself & your partner when you’re no longer working.
It’s like making a financial roadmap for a happy and relaxed future.
Retirement planning means saving and investing money throughout your working
years, so that you have sufficient funds to live comfortably and enjoy life
after you stop working. It’s like preparing a financial blueprint in your last
days
Retirement planning is like preparing for a long vacation after working for a really long time. By saving or investing money, you can have a great time and relax when you’re not working.
Just like saving money for a foreign trip, in retirement planning, you save a portion of your earnings regularly over a period of time. This money is utilized for your future, to enjoy life when you’re not working.
Plan Your Retirement Wisely
Below are the tips to you that are intended to benefit from retirement planning at an early stage in life.
What is Retirement Planning:
Retirement is one stage of life wherein your regular income drops and the accumulated funds tend to support your livelihood. And, every individual on crossing the retirement age shall need a mechanism that would support the shortfalls, emergencies, etc.
First, setting aside funds from the beginning of your career keeps your future safe and secure. In addition, it teaches you to manage finances in a well balanced pattern.
Several essential entities that were taken care of by the employers, or financial/insurance institutions such as medical, loan, travel expenses, etc after retirement, will have to be supplemented through another source.
Retirement Planning & its Significance:
Arrangement of funds during the post retirement period is the basic need that makes you step in for the retirement planning.
In old age, your earnings till retirement may not supplement your medical expenditure. And, the social security benefits obtained remain insufficient to live up to your pre-retirement living standards.
A pre-planned investment can enable you in a significant protection from the effects of inflation, and market volatility. Another important perspective in making such investments is to reduce the tax burden on the retirement income.
Furthermore, the retirement planning can help you meet the additional expenses like traveling, hobbies, and even funding the grand children’s education.
Stages of Retirement Planning:
You can make your retirement planning at various stages of life, Young adulthood(21-35 years):Early Midlife( 35-50 years): Later Midlife ( 50-65 years).
Young Adulthood (21-35 years):
In the earlier stages of life, your earning may be less than and have little to save. But still you must create the habit of saving and steadily develop the asset. However such an activity is a significant component of retirement savings.
Financial experts say that you must adopt high risk instruments for high returns.
Since you are in your earlier time of employment you can quite easily recover from the market dips.
Early Midlife (36- 50 years):
Early midlife is always considered as a period that is highly proactive in saving through your earnings. So, it is the period in life that you can invest more and allow your investments to grow faster.
You can encounter financial burdens in several ways, like, mortgages, insurance premiums, credit card debit, and child-education loans. But, you must cautiously make your saving investment and keep up the track with your retirement goals.
Later Midlife (51 to 65 years):
The midlife period can make you exposed to various possibilities in this form.
You may be able to fulfil the social and family obligations like home, child education, etc, and clear the debts so may have incurred. Furthermore, you are likely to earn more due to less available time and should continue to be involved in the savings activity.
Financial experts advise you in making investments in a conservative manner. Since the equity markets are highly volatile and the fluctuations can create innumerable dips in the financial markets.
Factors to Remember While Planning for Retirement
Before you initiate to work upon the retirement planning you must involve certain facts. These elements contribute to arriving at the precise value of retirement investments for a fixed outcome on it.
Lifestyle Is Proportional to your Spending
You must make a right estimation of your spending that is dependent on the lifestyle you choose.
If you happen to make higher spending in the future then one thing is certain you must increase your saving component.
On the contrary, if you are unable to make proper calculations on your future lifestyle spendings then you are likely to end up in risk.
Manage Dimensions of Time:
If you are wise enough, then you shall begin to invest at an early stage on retirement schemes. It will benefit you in the future to make portfolio changes as you get closer to retirement.
The thumb-rule is, your investments in the equity markets can help you build higher asset value. More importantly, you must adopt it at an earlier age to create a zero tolerance portfolio.
As you enter into older age, between 51 and 65 years, you must concentrate on income and capital preservation.
Risk Bearing Capacity on Your Investments
You should make a clear decision in setting aside some funds from your regular income. Then, classify your investment of such funds and grow it with a certain level of risk.
A planned structure can alone enable you in growing and managing the possible risk factors.
Check for the Tax Cuts on your Investment Returns:
On your investments, you may attract taxes on your investment gains and in addition on market rate of return. Hence, you must be aware of the taxation laws that govern your investment plans.
It means you must have a clear vision on the after tax value on investments. It will help you in defining logical choices about your resource commitments.
Estate Planning
Estate planning enables you to distribute your assets to your close aides in your chosen manner.
You will have to plan your resources ahead in time just to protect your interests in your chosen asset allocation.