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5 Tips to Consider while Planning Your Retirement

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Retirement planning

From your childhood, you unknowingly develop the habit of saving. If you remember, you used to save a portion of your pocket money, right? This way, your investor psychology began to set. Then you joined your first job. You started interacting with more people and got to know more about various kinds of saving, mostly related to tax saving such as PPF, EPF. Gradually, you started focusing on tax saving for the next few years. Then you got married, have children. Again your investment focus got diverted. As requirements continued to grow, so the expense, spending or investment continues. Now you want to invest in a home loan or car loan to fulfil your life’s biggest goals and you think you do enough by accruing then.

But are you doing enough?

All the way while doing this, one of your major life goals could suffer that’s Retirement Planning!

Have you considered those golden days of your life, when there is no flow of regular income? If not here’s why you should do it at the earliest!

Retirement Plan: Why it is Necessary

With the increasing life expectancy, align with the inflation and quality healthcare cost growing at a rapid pace, you may face the problem of keeping your savings safe investment may fall short in case of an emergency. After retirement, when there is no source of income but expense remains the same, investing for those sunset days will help you utilise your hard-earned money in an appropriate way.

Usually, people tend to think about their retirement at the age of 55 or 60 years, while experts suggest that one must consider securing its nest egg minimum for another 20 years or more. Even, in case you outlive your retirement plan, you’ll still have more options. Here’s how you can go about this!

How to Make Your Retirement Planning Adequate

If you haven’t started planning for your retirement days, it’s never too late! All you need is proper planning and some zest to execute it. Here are a few tips in this regard:

  • Start Early

    If you are among those who think they might outlive the retirement plan, expert’s advice to start planning at an early age. It lowers the risk of outliving your savings. Moreover, by working for a few more years will help you get rid of the fear of having an inadequate retirement fund. Be preparing for the uncertain and add some equity through the mutual fund to the fixed income asset. You must keep a track on your savings from time to time to ensure the funds don’t become insufficient.

  • Invest in Long-term Equity

    Those who start retirement planning at their later stage, approaching should invest a higher proportion in the growth assets. Then move slowly to debt instruments while approaching the retirement days. However, young or middle age investors have enough time to build a sufficient corpus of retirement through their equity investments. As per the experts, despite the volatile nature, long term equity investment is more likely to deliver good returns to solve your investment purpose.

  • Tax Benefit on Retirement Income

    Planning while approaching your retirement can lead to limited opportunities. Life insurance experts say in case of shortage, investors either can increase the number of investments aim to create higher returns or reduce the number of expenses. Apart from cutting down on the luxury spends, you should also focus on the tax efficiency on the retirement income. Again, by allocating a minimal portion of your investable surplus towards beating inflation while considering relocating to a smaller residence.

Retirement plan

  • Analyse the post-retirement Financial Goals

    If you are planning your retirement early, do analyse the post-retirement financial goals. You should consider the annuity income, a sufficient investment to take care of your healthcare-related expenses and life expectancy etc. You also should have time-bound goals about how to let your retirement corpus grow. Subsequently, make changes in your financial portfolio in a manner that your current cash-flow doesn’t suffer at the time of making investments.

  • Take Advice from an Expert

    To get an exact idea about how much will you need for retirement. It is recommended to take a second opinion. An expert can help you through the related queries. You can also take help from retirement corpus calculator by mentioning certain information such as the inflation-adjusted future value of your current monthly expenses plus the estimated rate of return on investment along with the rate of return once you retire and life expectancy.

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Some of the Long-term Investment

If you’re willing to invest for a long-term purpose, you can consider some of the long-term retirement tools such as fixed deposit, Public Provident Fund etc. Each of them is designed with a specific purpose such as long-term investment, short-term investment, tax-saving investment, wealth-building investment schemes etc. In order to diversify your investment portfolio, you can invest more than one scheme and make the most out of your investments.

To Conclude

To make your retirement planning successful, you should also consider the retirement products that are an ideal mix of debt and equity. Growth and fixed-income investments can also be useful in the long run. As the retirement phase is usually long, low risk-investment tools such as FDs, PPF (Public Provident Fund), equity funds can be considered. Experts recommend investing in the Provident Fund in the early stage as the contribution could rise by 80 to 85 percent from 25 to 30 percent by the time you retire

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