Planning for Retirement has become a very important task in personal financial planning. Rising living and healthcare costs have ensured that it continues to remain so. With increasing aspirations, comfortable retirement is fast going beyond the reach of individuals.
Almost Seventy Percent of the working people in developing countries have not started saving for the future, or have stopped when faced with difficulties while saving. In such a scenario, retirement saving needs are high, but is very much possible to fulfill them with proper and advance planning.
Basis of Retirement Planning:
Financial Planning for retirement , if done properly, will ensure comfortable, stress free/golden years of life, if not, many have to return to the grind to make ends meet, in the later years of life.
· Prices will keep on rising
· Risk free return will keep on going down with growth in economy.
· Plan retirement investments as soon as possible
· Invest in high-risk high-return assets in early years of your work life
· Invest regularly even if in small amount
· Increase your investments with the growth in your income
· Account for tax effect on your retirement savings
Actions you must avoid for a great retirement:
· Waiting for better income/surplus to start planning for retirement
· Diversion of your retirement savings for another goal or aspiration
· Timing your retirement investment; i.e. waiting for a fall in equity market
· Withdrawing from Employee Provident Fund on changing the organization
· Ignoring the inflation and tax impact on your investment
· Frequent changing of retirement plan
How to invest for retirement?
In the accumulation phase (pre-retirement) the objective is to save more and grow your investments as much as possible. Whereas, after retirement the objective is to preserve the corpus as long as possible, while ensuring that you have a regular income sufficient to meet your expenses.
Most of the time, when people refer to ‘retirement planning,’ they are talking about the money you will need to live on when you stop working at your job.
But since ‘retirement,’ is a great deal more than the money, so is Planning for retirement even though we focus on the money.
Retirement is the last third of life. That period can be anything from forty years or less depending upon the age at which you “retire.”
When you are young, just saving money is all you have the time to consider. But as you age, particularly within the last ten years leading up to your “Retirement,” you need to focus on other things:
1. Who are you outside of the “job.” Get A work life balance
2. What do you want to do with the rest of your life?
3. Where would you like to live?
4. Do you want to travel?
5. What are your spiritual beliefs? We are all getting older regardless of our preference to ignore that.
6. How close are you to your family?
7. What is your healthy living plan.
8. What is your external support system? - Your support system outside of work. Is it adequate for a time when there is not work?
These are just a few of the things to consider in “retirement.” These are just some of the other things you need to consider outside of the money. If you can focus on these things your whole life, planning for retirement will be a breeze.
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