Importance of Holistic And Discipline Retirement Planning

The danger of outliving one’s saving is real and the only solution is to plan your retirement as early as possible.

In your mid-twenties or thirties, retirement may seem a distant thing to worry about. Yet, if you want to lead a comfortable and dignified retired life, financial planning is necessary. No matter what your ideal retirement looks like, be it a relaxed time at home family and loved ones, or one of adventure and travel, it will need money.

What does retirement planning means?

Retirement planning means preparing today for your future life so that you continue to meet all your goals and dreams independently. This includes setting your retirement goals, estimating the amount of money you will need, and investing to grow your retirement savings.

Every retirement plan is unique in its own way as everyone may have specific goals and ideas on how they want to plan their retired life.

Planning for retirement starts with thinking about your retirement goals and how long you have to meet them. You can take help from retirement planning consultants and start your retirement planning.

Why do you need retirement planning?

Since you retired, you wouldn’t have regular source of income and growing old can be expensive.Although unimportant expenses might reduce, medical bills are likely to rise. Add to that the burden of inflation, and not having enough money to sustain future expenses can cause stress and worry. So, there is a possibility that you outlive your savings and won’t be able to maintain a desired standard of living.By planning for retirement, you can multiply your savings by a significant margin without having to worry about the expenses in your later years.

You retire from work, not life. You may have a new set of dreams for your post-retirement life.

Here is how retirement planning can help you:

1. To maintain the standard of living: You want your current lifestyle to continue even after you retired. Today these expenses are covered by monthly income. but after retirement, you can plan to get your regular income to maintain your lifestyle.

2. Financial independence: For generations, older Indians have depended on their children for retirement support. Lately, youngsters are leading more independent lives. Often, they are unable to support their parents financially. Even if they can do it, being responsible for yourself will give you more independence to live life on your own terms because you will not be answerable to anyone else.

3. To fight inflation / Rising costs: Recently, In India the price of consumer goods set by 5.4% (CPI Inflation) by government. This could affect your standard of living.

After all, what you could buy today for say Rs 100, will probably could cost a lot more tomorrow.
If you are unable to keep up with rising costs, you may have to compromise on your standard of living.
By planning for retirement, you can invest in advance and grow your money to beat the rising costs.

4. To be emergency-ready: You would not want to depend on anyone in case of financial emergencies or medical emergencies. Medical costs are pivotal to understanding the importance of retirement planning. While retail expenses continue to rise steadily, healthcare inflation is growing at alarming rate. While other financial goals may be negotiable, health cannot be compromised.

With right retirement planning, you can build an emergency fund that will keep you prepared any contingency.

5. To be prepared for longer life: As the average life expectancy is higher today, you may need to save a lot more for your retirement. By planning in advance you can make all the arrangements for a longer post retirement income.

How to plan your retirement?

The first step to plan your retirement is to picture it out how you would want to spend your golden days of your retirement and then estimate the money you would need to save. And above all, retirement planning should be done with a keen eye on inflation, since it is the single most important factor that affects everybody’s savings.

Retirement planning should include determining time horizons, estimating expenses, calculating required after-tax returns, and assessing risk tolerance.

Next, estimate how much of your retirement goal can be covered using your assets. This can help you arrive at the deficit amount you will need to plan and arrange for the future in advance.

Analyze your present financial condition to determine how much you can save. Ideally, about 30-50 per cent of your total savings should go towards retirement.

After this, you can note down your investment avenues. The younger you are, the more time you have to take advantage of compounding as well as take a few risks. Invest aggressively in mutual funds and even company stocks, if you can afford it. As you grow older, you may want to consider diversifying your investments to include lower-risk instruments like government-backed securities. Also, think about including annuities and insurance policies in your retirement plan.

Factors to keep in mind while planning for retirement:

• Start early as possible: When it comes to retirement planning, starting early holds the key, as time is your best asset. the more time you have, the better you can grow your money and the more goals you can fulfill.
• Invest first, spend later: Schedule your portion of investment from your monthly income first then do the needy things later.
• Pay off costly debts firsts: While working on your retirement plan, you can directs your savings towards paying off any debt first, this can help you to secure your retirement from liabilities.
• Set automatic transfers: You can make it easy by setting up automatic transfers from bank. This can helps you to avoid any misses or delays in monthly investment.
• Check for tax efficiency: When you choose an investment option, you may want to check on how the returns will be taxed.
• Monitor regularly: You should check your investment at least once a year. This can help you adapt your plan better.

When should you start retirement planning?

Even though there is no as such fixed age to start the retirement planning, it works when individual starts planning for from the beginning, but the sooner, the better.

That’s right — today. Not tomorrow. It’s incredibly vital that you start planning for retirement early.
Although youth in their 20s might not worry about retirement, starting early does give one more liberty. If you have missed that bus, you can start where you are.

A good retirement plan should be segregated into investment, accumulation, and withdrawal phases. Until your early 50s, you should focus on investing and building your corpus. As you near retirement, you should be able to shift the money to safer avenues so that you can depend on dipping into it after retirement. If you have any doubt while planning for the retirement, you can contact to financial services companies and take their invaluable advice.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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