Each one of us will come across a stage in life, when one feels exhausted with work, and retirement is the only option, left before us. Most of us will concur on this, I understand.
Upon reaching such a juncture in life, one longs to relax and lead a comfortable life, after slogging much in life. A comfortable retirement is what we would look forward to, at the fag end of our careers. So why not plan for our retirement, in good time?
Unlike USA and other foreign nations, India does not have a social security system. Also few surveys have indicated, majority of the working people in India do not plan for their retirement, and are of the belief, that their current savings will suffice their post-retirement needs.
Also in urban India, most of the people live in nuclear families; hence retirement planning is imperative to meet financial needs, particularly during old age.
It is thus advisable, one starts planning for retirement early; this will not only make one`s financial commitments lesser, but will also help compound one`s corpus many fold, by the time one reaches the age of retirement.
The following tips may be pondered upon while planning one`s retirement:-
Getting started: The earlier one starts planning for retirement, the more peaceful and comfortable, will be one`s retirement. This is so because, when one is young, the risk taking capacity is high, and also the investment horizon is comparatively longer, enabling one to benefit from compounding. If you are late also, do not begrudge yourself, and start right away, as someone has rightly said, “Better late than never.“
Financial Planning: Based on your income and expenses, evaluate your financial position, and accordingly set aside some money for any unforeseen expenses after retirement, like travel or medical expenditures. Also try to budget your expenses, and save money for necessary expenses like marriage, children education etc, that may arise in the course of your life.
Seek professional advice: If you are not able to manage and plan your finances, seek professional services of a financial advisor. A financial advisor will guide you, and give you suitable options and alternatives to realize your financial objectives. Analyze the options so presented for your retirement. The idea is to make your financial dreams come true, accepting your prevailing financial condition, and risk appetite.
Monitoring your plan: Once you have set your financial objectives and plan, you need to monitor them at regular intervals, which may be done on your own, or with the guidance of a professional. The plans must be adjusted in accordance with one`s risk appetite and investment objectives, in the light of the fluctuations in the market. For instance, when one is approaching the age of retirement, one`s risk tolerance will become lower, and hence one should give a thought on shifting one`s exposure from equity to debt.
Systematic investment: Make a determination to invest a fixed sum, every month, or at fixed intervals of time, for your post-retirement life, and this may be doubly ensured by making a proper choice of retirement plans available.
Keep your savings intact: Last but not the least, keep your retirement savings intact. Do not touch these savings, except in case of dire emergency. If you happen to make use of these savings, your retirement corpus will become much lower than intended.
Thus if one exercises some discipline in spending one`s money, particularly keeping in mind, the tips discussed above, one can plan for retirement with much ease. It may be concluded, from the above, that retirement planning is a necessary part of our financial life, and one should begin it as early as possible.