Retirement can always be an essential part of your life. While working, you might be aiming to lead a comfortable retirement period. You might accumulate your hard-earned savings during your active years to retire peacefully. However, there can be times when you might push your retirement planning to the later phase of life due to financial responsibilities such as your child’s education.
Since retirement can be a long process, you need to have enough time to accumulate wealth. Ideally, you should begin your retirement planning process at a young age. However, you might not consider it seriously due to inevitable circumstances until you near retirement age. Although you might not have started your retirement planning process, you can still be able to keep up with the help of the following four tips mentioned below:
Identify your financial requirements.
The first and most crucial step towards successful retirement planning is to ensure that you evaluate your expenses. As an aspiring retiree, you should consider your monthly and household expenses such as utility bills, grocery, rental payments, etc. Before reaching your retirement age, you can calculate the estimated amount you require to save for your retirement on a retirement calculator. A retirement calculator is an online tool that can allow you to understand how much money you should save for a stress-free period in the future.
Consider the different types of saving options.
Many of you might save adequately for your retirement. According to the Aegon Retirement Index, 50% of the Indian population are habitual savers. Usually, you might deposit your money in the various savings instruments present in the market today. As a working professional, your organization might have provided you with a Provident Fund (PF) that can allow you to save a specific proportion of your income every month. Moreover, PFS can reduce your tax liability under Section 80C, allowing you to claim a deduction of up to Rs. 1,50,000. It would help if you looked for those saving options that can allow you to accumulate ample money and withdraw money during an unfortunate event such as critical illness, physical disability, loss of income, death, etc.
Cut down on irrelevant expenses.
After retirement, the flow of your professional income can stop. Since you might not have any other source of retirement, you should get your finances on track. When you begin your retirement planning, you can start by cutting down on irrelevant expenses, such as shopping, buying fancy gadgets or automobiles, etc. Cutting unnecessary costs can help you save money for retirement and develop a disciplined financial habit. Moreover, it can let you make way for the additional cash flow toward your retirement corpus.
Park your funds in the right investment tools.
Another way to inculcate a disciplined habit of savings is by opting for the right instruments, such as Unit Linked Insurance Plan (ULIP), Systematic Investment Plan (SIP), retirement investment plans, etc. Such programs can allow you to grow your wealth and receive investment returns. However, you should invest in these investment tools at a young age since you have more time to accumulate funds for retirement. For instance, if you invest 30, you can get Rs. 75 lakhs approximately.
To conclude, retirement is no longer about age. It is about the number of funds you save for a comfortable retirement period. Even though you might have started late, you must ensure that you make the right financial measures and maintain a balance between savings and investments. Ultimately, beginning your retirement planning process is always better late than never.
