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The financial planners generally advise that you should start planning for retirement as soon as you start earning. The earlier you start planning, the most likely you will succeed in retiring with sufficient funds for your non-earning period. Even if you are in your 50s when you start planning for it, you do not need to lose hope. Among the different sets of options, there have been seen the highest interest rates on fd investment plans.
We often neglect or ignore about retirement. As necessary it is to live, for now, savings play an equally important role. Life moves at a breakneck pace, and we need to be on the go.
It is essential to face reality. We have both short term and long term goals. We often achieve our short term goals, but we forget to achieve our long-term goals. This is the reason that retirement planning plays a vital role.
Role of inflation and trend of our economy
If we will closely watch the level of an economy, inflation is at its peak. We somehow need to keep a track record of future predictions to calculate the present scenario.
Let us take an n example if we need RS50,00O in a month for running our daily expenditure. Let us say there is a rise in inflation up to 6 %, now the income required will be increased to Rs70,000 per month. On average, in 10 years, the amount needed will be RS90,000.
How to start our Investment Plan?
Having an honest overview is the best thing you can do for yourself. Create a finance sheet and calculate your current expenses. Similarly, plan your retirement goals based on your ongoing costs and existing investment. While calculating, don’t forget to keep in mind the rate of inflation.
Down below are some tips that would help you achieve successful planning for your retirement.
Boost your Savings
If your savings are running low, there are two ways you can boost it. You can increase how much you invest every month. The second option is to go for investments that would help you earn higher returns. If you are close to retirement, your objective shouldn’t be to maximize returns but to maximize savings.
Don’t get too Conservative
It is generally advisable not to take too much risk while investing. Taking a little conservative approach reduces the allocation to risky assets such as stocks.
However, if you have a long investment tenure, it won’t be good to be too conservative, because stock markets are generally very volatile. So, there should be a perfect balance in taking and avoiding risks.
Health Insurance
Health insurance can help you save your finances against the increasing healthcare cost. It is highly advisable to buy separate health insurance for yourself, even when a group health insurance covers you. You should not wait until retirement to buy one, as you may not be in a condition to do so at that time. So, you should buy one when you are still healthy, and renew it regularly for more significant benefits.
You can also ask your employer if your group cover can later be converted into an individual plan after you retire.
Don’t take new Loans
Taking on the burden of new EMIs just before your retirement is not a good idea. It might also lead you to spend your retirement savings on other and not that important expenses. So, if you have a secure job and sufficient, you should avoid taking on new loans.
Avoid Real Estate
You need to be cautious of taking a loan when it comes to real estate. Experts say that it is a bad idea to invest in real estate or property. The price of property increases very slowly, and in some markets, they have even reduced. If we calculate it, an increase in property prices by 3% in a year would mean that you will have to wait for 10 years for positive returns.
Look for Tax-Efficient Options of Investment
Looking for tax-efficient options for investment can boost your savings. For example, fixed deposits are not very tax efficient as you will end up paying a lot of taxes on the interest you earned. And this tax would have to be paid every year, so there is hardly any benefit.
In a mutual debt fund, you need to pay only at the time of withdrawal. It means that it will help you defer your tax liability to a time when your income and hence, your tax liability will be minimum.
Deal with your Unsuitable Investments
Everyone has those policies and investments in their portfolios that don’t particularly serve them. These low-yielding and unsuitable insurance policies were a result of the period when there was low financial literacy, and people consider life insurance to be the best investment. So, experts advise that closing such low-yielding policies would be best for the person who is planning for retirement.
Time to reevaluate your portfolio
By the time we reach age 50, we have an excellent portfolio prepared. Take into note that it is time to revisit the portfolio. Often, the advice is given to play safe and avoid risks. But going thoroughly conservative will also not lead you to a good game.
It is essential to replace your risky assess with a safer option.
The debt-equity ratio needs to be balanced to reduce the risk factor of your portfolio.
These tips and advice are best for the people who have started planning for retirement in their 50s. Even though it might seem late to be doing do, these tips will help you achieve your goal successfully.
Changing times
This is another breakthrough we need to discuss. Gone are the days, when in old age, we depend on your children for our well-being and care. India is growing and progressing. Children generally prefer to relocate for their jobs and plan a nuclear family. There is already an existing pressure to earn money and afford a decent lifestyle. This leaves no space and time for parents and elders.
Being independent is the best feeling. Why not continue with this feeling even after 60. We must prepare our minds not to take financial help from your immediate family members. It is not only about monetary value. We feel a sense of mental satisfaction. We are buying our spectacles, having good food. A good retirement plan allows you to keep our head high and live a fulfilled and dignified retired life.
Family Planning and KIDS:
Age 50 is seen as an age of significant responsibility. We can’t ignore our kids. We throw away a lot of money without much planning. This can lead to a substantial liability on us and bearing debt. A perfect solution we can do take a loan by signing your child’s name as a borrower. This is a good practice and will also build a habit of discipline and responsibility for your child from a young age.
Second earning opportunities
Expenses are endless. No matter if you are 20 or 40 or 60. The best way to lead a life post-retirement is to continue earning. With the new age of digitalization, there are a plethora of opportunities we have. Prepare your ground before you retire.
An example could be taking up a teaching assignment or be a freelancer. Instead, this is the best time to recall, revisit all your passions. Remember the things you wanted to do, but could not do. It is now that you can make the best use of this time.
Let us look at some of the factors we often ignore. Life is uncertain, and we need to prepare ourselves for the worst.
The fear of death or the unforeseen risk of death can crop up at any time. A typical scenario can be seen in which there is a sole breadwinner, and the other spouse is not working. A term insurance plan can be a good option in such a case. The spouse will be given the sum -assured in case of death.
IN case both the spouse is aware, it is easy to achieve the retirement goal. A complete life insurance plan can help you to grow and save your investment. Save, invest, and grow your wealth at a faster pace.
Most of the sacred people have a large lump sum amount at the end of the retirement. The sum can be huge, say Rs70 Lakh. But wrong use can doom away the money in one trash. All it takes is some surgeries and hospitalizations to bring down the value. Hence, we need to utilize the corpus in a very effective way.
As a result, having an honest overview is the best thing you can do for yourself. Create a finance sheet and calculate your current expenses. Similarly, plan your retirement goals based on your ongoing costs and existing investment. While calculating, don’t forget to keep in mind the rate of inflation.
