You must have wondered at least once in your life, why retirement planning is important. The answer is quite simple, to maintain the current living standards and live comfortably long after you have retired from your job.
Even when a person is convinced about the importance of retirement planning, they often stagger at the question, “How much money do I need to for my retired life?”
The answer lies in the followingquestions:
- How long you expect to work?
- Do you expect any rise in the following years?
- What is your expected lifestyle post-retirement?
Plan your retirement through your savings
If you aren’t sure how much need to save for leading a comfortable retired life, plan your retirement by saving for the following situations:
- Medical emergencies: The cost of healthcare is skyrocketing each year and we all are aware of the adverse effect of aging. If you don’t plan your health care expenses well in advance there is a lingering fear of depleting your fund that you want to save aside for retirement. Get a health cover or renew an old one early in your employed life to build sufficient corpus to meet your medical expenses in your retired life.
- Emergency withdrawal: Identify your crucial expenses well so that you don’t have to dip into your accumulated retirement corpus time and again. Unplanned withdrawals from your corpus tend to erode your retirement saving; create a separate contingency fund for emergency withdrawals.
- Fixed income: Fixed income is constricted in nature; it doesn’t serve as a good option to rely on retirement planning if you tend to have a long-term financial goal in your mind.Invest in high yielding financial instruments and rebalance the investment portfolio from time to time to distribute the risks involved.
- Inflation: One can’t simply ignore the brunt of inflation on our income and living standard. With the life expectancy rates going up, one needs to save enough to prevent outliving their retirement corpus. The key is to start saving early in your life to build a solid retirement corpus through equity-based investments and other schemes specially designed for retirement. Opt for schemes that are tax saving and come under the 80C benefit for facilitating more savings.
- The period between jobs: The period between jobs or temporary job loss is crucial; one’s savings is the only viable option to tide over the financial crunch effectively. In case you don’t have a separate saving for meeting such crisises, you may dip into your retirement corpus but must reimburse it as soon as possible so that you can lead a comfortable retired life.
Financial emergency can creep up on you anytime, be prepared so that you don’t have to depend on others or put a burden of debt on your shoulder.
Are you saving enough for your retirement planning? Consult our financial planners to find out how to build a strong retirement corpus for a smooth and stress-free life after retirement.Follow Us: