July 22, 2024
retirement planning

During your working years, retirement might appear a distant goal to worry about. However, if you are looking to lead a dignified and comfortable retired life, financial planning is a must. With a proper retirement plan in place, you can slowly and steadily grow your wealth and meet your corpus requirement for your post-retirement life. Are you still not convinced by the idea of starting your retirement investment early? Read this.

Growing old is a costly affair. While frivolous expenditure may reduce, healthcare bills most likely may increase. To this, if you add inflation, the expenses may rise further. So, just by preparing a retirement plan, you can ensure financial stability during your post-retirement life without the need to depend on anyone. Discussed here are some important reasons for doing a retirement planning.

4 reasons why you must have a post-retirement corpus –

Inadequate social retirement benefit

Our country is yet to design a pragmatic security system with post-retirement benefits. While employee provident funds and pensions do exist, these fund sources may not be adequate to cover your post-retirement expenditures. Here’s why building a diversified post-retirement fund through investment in mutual funds and fixed-income investments is crucial.

Financial independence

Since time immemorial, individuals have always depended on their kids for retirement support. It is just lately that many investors who fall in the millennial and generation Z brackets have realised the importance of preparing a retirement corpus. Being financially independent during your retirement days allows you to live your life on your own conditions so that you are not answerable to anyone about your financial moves.

Increasing expenses

Inflation is an important element you must factor in when you plan out your retirement corpus. In case you are not able to keep up with the increasing costs, you might have to compromise on your living standards.

Healthcare exigencies

Medical expenses are a pivotal aspect you must understand when preparing for your retirement plan. Note that, besides retail expenses, medical expenses are growing at an alarming rate. While you can negotiate on your other financial goals, you cannot compromise on your health.

How to prepare your retirement plan?

To design your retirement plan, initially, you must estimate the funds that you require to sustain the same lifestyle as the current one. Do not forget to factor in inflation. Next, find out how much you can cover through your assets. This may assist you to figure out a deficit amount you require and arrange the same in the future. Review your current financial situation to understand the figure you can save. Ideally, 30%-50% of your overall income must go towards your post-retirement savings and investments. After this, choose prudent investment platforms. The earlier you begin with your investment, the more time you get to make the most out of the compounding effect. To get higher returns and reach your retirement goal faster, you must aggressively invest in mutual funds and company stocks in case you can afford to take higher risks. If you have a low-risk appetite, then you may opt for government-backed securities and investment options. You must also consider investing in insurance policies for your retirement.

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