Retirement Planning

Retirement happens to be one of the most important life-stage goals, if not the most important! Yet, most of us do not plan prudently to ensure we have a happy and hassle-free post-retirement life. Retirement is a fairly long-term goal, which requires careful considerations and planning. Retirement planning is a very important aspect of the financial planning process and investors are definitely beginning to realize the importance of the same.  A 30-30 rule of thumb says an individual earns for 30 years, to provide for 30 years of post-retirement life where the individual’s income would have stopped, yet the need to maintain similar life style exists. For this, you need some sound pension plans. ​   Retirement Planning and Investment is ideal for Investors:
  • Investors keen to save for retirement
  • Follow an life cycle based approach to retirement savings
  • Salaried employees looking for regular savings avenue for retirement
  • Self-employed who usually don’t have post retirement benefits accruing to them
  • Investors seeking an alternative to traditional retirement saving avenues
  Have you planned for your retirement yet? How to effectively Invest in Scheme so that you can achieve your goal?      

What is Retirement plan and why you need one?

A retirement plan helps you collect enough funds to remain financially independent during your retirement years. It entails deciding your retirement age, how much money you will need for your monthly expenses during retirement and how much you need to set aside now to accumulate that corpus for retirement years. There are different investment products for retirement planning.. Mutual funds is one of the suitable investment products to plan your retirement.

A lot of people neglect retirement financial planning; let’s find out why it is one of the most important financial requirements:

How later is LATER? : When it comes to time, investment and planning, we tend to place ourselves last on our priority list. Pushing things off for later has almost become a second habit what with monthly EMIs, child’s studies and daily expenses taking up our time. Sooner or later our retirement will soon catch up, but are we prepared?

Life expectancy is rising: The average Indian can expect to live longer than before. With longer life span, you need more income in your non-working years to maintain yourself.

Working forever is difficult: As we age, we yearn for more restful moments or we simply can’t work due to medical reasons. A retirement plan can provide income after work life ends.

Your responsibilities don’ts end at the retirement : Securing your finances well before retirement can help you:
• Maintain your current lifestyle
• Fulfill dreams and aspirations you put off for later
• Protect your health
• Leave a legacy

Your future may require more funds: Over time, cost of living continually rises due to inflation. Besides, medical expenses also rise as one faces greater health challenges with age.

Inflation can burst your bubble : Your retirement years will last as long as the number of your working years. In India, healthcare costs are rising at an astonishing rate of over 10% p.a. ;Therefore, growing older means more will be your medical expenses. In the future, your sala may not be able to keep up with rising inflation. A monthly saving of Rs. 25,000 will be equivalent to Rs. 5596 aer some 30 years.  Maintaining the same lifestyle in your retirement will also be subject to inflation. For example: If your monthly expense is Rs. 35,000, and if you retire 30 years from now, you will need Rs. 1.56 lakhs eve month, if the annual rate of inflation is 5%.

Financial independence: All of us want to live a life of dignity and independence. If you are able to fund your own retirement, your children will have more resources to spend on your grandchildren. Retirement planning thus is a gift from you to your future generations, although indirectly.

Due to better healthcare and progress in science, people are getting healthier and living longer. It would not be uncommon for people to live quite easily up to 85 years in the near future. Moreover the life span of fixed income paying jobs is on a decline. A reducing career span has resulted in a rise in entrepreneurship which means people would need an entrepreneurship corpus at some stage in their life.

Inflation also plays havoc all the time by decreasing the buying power of your money. Hence there has been never a greater need of building a voluntary retirement corpus for overcoming the difficulties of post retirement period than today.

If one assumes an average career start age of 25yrs and an average retirement to catch up by the age of 55, then it means one has to work for 30 years and have to fend for 30 years on its own without any regular source of income. This is the ‘30-30 CHALLENGE’ that has to be surmounted.

Retirement Planning Tips & Solutions

 

Retirement planning is essential for a happy and fulfilling retired life. Going through your working life without undertaking retirement financial planning may lead to situations where you may not be able to maintain your current lifestyle. Here are some helpful tips to select the right retirement investment and to plan for your golden years:

Start early: The earlier you start saving for your retirement, greater will be your retirement corpus. Compounding plays an important role in the long run.

Factor in Inflation: When you are considering retirement investment solutions, you should weigh in the impact of inflation. The investments you choose should provide returns that exceed the inflation rate.

Think about your health: Rising healthcare costs will form a large part of your expenses during retirement. Make adequate provisions for healthcare expenses for yourself and your spouse.

Use asset allocation: Your retirement investment solutions should include a suitable asset allocation between equity &, debt. While you are young, you should invest a larger portion of your corpus in equity, which has the potential to grow your wealth at a higher rate than inflation. As you near retirement, shift your investments to debt, which offers safety and regular income.

Consult a Financial Advisor: A Financial Advisor will help you evaluate and choose the right investment options to plan your retirement.

Retirement planning requires a systematic approach, which factors in your needs during retirement objectively and then execution using a strategic approach like asset allocation.

 

We will create diversified portfolio which includes Top Mutual Funds Companies like Aditya Birla Sun Life/Tata Mutual Funds/ SBI Mutual Fund/ Axis Mutual Funds/ Kotak Mutual Fund/Reliance Mutual Funds/ ICICI Prudential / HDFC Mutual Funds/ DSP/ Invesco etc and carefully structured suite of plans designed to meet the investment needs of investors planning for retirement. It works as a retirement solution by offering choice of asset allocation to investors based on their life stage and risk preference.

Please contact us for investment and advice.