Retirement can always be an essential part of your life. While working, you might be aiming to lead a comfortable retirement period. During your active years, you might accumulate your hard-earned savings to retire peacefully. However, there can be times when you might push your retirement planning in the later phase of life due to financial responsibilities such as your child’s education, and so forth.
Since retirement can a long process, you need to have enough time in your hands to accumulate wealth. Ideally, you should begin your retirement planning process at a young age. However, due to inevitable circumstances, you might not have given it a serious thought until you near the retirement age. Although you might not have started your retirement planning process, you can still be able to keep up with the help of these 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 payment, and so forth. 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 which 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, which can let you claim a deduction up to Rs. 1,50,000. You should look for those saving options that can allow you to accumulate ample amount of money as well as withdraw money during an unfortunate event such as critical illness, physical disability, loss of income, death, and so on.
- 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 your irrelevant expenses such as shopping, buying fancy gadgets or automobiles, and so forth. Cutting unnecessary costs can help you to save a lot of money for your retirement and develop a disciplined financial habit. Moreover, it can let you make way for the additional cash flow that can go towards 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, and so forth. Such plans can allow you to grow your wealth as well as receive returns on your investments. However, you should invest in these investment tools at a young age since you have more time in your hands to accumulate funds for your retirement. For instance, if you invest at the age of 30, you can accumulate 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, all you have to do is ensure that you take the right financial measures and maintain a balance between savings and investments. In the end, it’s always better late than never to begin your retirement planning process.