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Plans for Retirement



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1. Save 10% of your income for retirement

SMART TIP:
Start an SIP in a mutual fund and automate the process by giving an ECS mandate to your bank. In this way, your retirement planning will stay on track.


2. Increase investment as your income grows

SMART TIP:
Whenever you get a raise, allocate half of it to savings. You might not notice the change since you will be enjoying the other half of the raise.


3. Don't dip into corpus before you retire

SMART TIP:
Instead of withdrawing your EPF balance when you change jobs, transfer it to the new account by filling 'Form 13' and submitting it to the new employer. This should be at the top in your list of priorities at the new workplace.


4. Withdraw 5% a year initially, then step up

SMART TIP:
You can safely draw down half the inflation-adjusted appreciation every year. If the portfolio has earned 12%, you can easily withdraw 6%.


5. 100 — age = Your allocation to stocks

SMART TIP:
Invest in asset allocation funds that redistribute the corpus depending on the age of the investor. As he grows older, the exposure to equity is progressively reduced.


6. Borrow for education, save for retirement

SMART TIP:
An education loan helps inculcate financial discipline in the child. If he is responsible for the repayment, he gets into the saving habit early in life.


7. Save 20 times your annual expenses

SMART TIP:
Buy a health insurance cover that continues till you are 70-75 years old. It is difficult to buy one afresh when you are older and not so healthy.


Non-Pensioners

Why is retirement planning crucial?

Retirement is the time when you would like to spend your days doing what you love — travel, live in the farm house, start a poultry farm, restaurant etc. However, I have come across many people who are not very comfortable about retirement thinking that their regular income will then become irregular.

Everyone has to retire at some point from their working lives. Everyone has plans on how they will live their lives to the fullest then! We all know of inflation and how it affects our expenses, with each passing year. Imagine that you have a great retirement dream, but there is a cost attached to it, you know there won't be regular income and expenses will continue to rise. Hence, I feel it becomes imperative that we start saving systematically to enjoy our retired life to the fullest.

Retirement planning in India

Research shows that most working people in India do not plan their savings towards retirement and believe that their current savings will be enough to take care of their post retirement needs. In a nuclear family structure, support in the old age is no longer easy and everyone has to be self content in their retirement years. Moreover, there is no social security system in the country. So it is crucial for individuals to realize that through a systematic retirement plan one can maintain their standard post-retirement lifestyle

Starting early helps save more

It's good if you start planning your finances early – your financial commitments are likely to be fewer, and hence you can salt away more. Planning at the early years of your career also helps compound the corpus many times by the time you retire.

Things to remember while planning for retirement

1: Decide how much income you require to live comfortably in your post-retirement years. Consider aspects like increased medical costs, vacations but reduce costs like children's education and rent, if you own your home. You must map this income on basis of your current lifestyle.

2: Determine how much you need to save regularly, starting today, to have the right amount. Start allocating as much as you can towards your retirement kitty. In case you are currently not in a position to set apart the funds required, start with whatever is at your disposal.

3: Select the right retirement plan, which will help you meet your post-retirement requirements.

4: Start saving now! Then you will have time on your side and can enjoy the power of compounding.

5: Systematically invest a fixed amount every month for your post-retirement years and lead a tension free healthy retirement.

Not only is retirement planning an essential aspect of one's overall financial planning exercise but is also crucial to be commenced early in life. One must always remember that systematic and early retirement planning can help you reduce your financial burden incurred during the post retirement years and help you plan for a carefree and financially secured post retirement life today.

 

Why retirement in future India will be much bigger and serious issue.

Look at all the points in totality and you will realise that planning for own’s retirement is not just an option but a necessity these days.

1. Increase in life expectancy in India

One of the major problem while doing retirement planning is to assume how long the retirement will last. This has a direct relation with life expectancy. As a country develops, its healthcare and overall life style level improves and life expectancy increases.Overall the conclusion is Longer life in future will mean more money required in retirement compared to  today. Simple !”

2. Increase in Dependency Ratio

Dependency ratio means the ratio of Old age population vs Young population. To calculate it, just take total population above Age 60 and divide it with population between 15 yrs – 60 yrs and you will get Dependency Ratio.



 

 

 

 

 

 

 

 

 

3. Decline of joint family structure

families size are shrinking on average. More and more parents these days are living in their home town where they raised their kids , but kids have moved to other places and settled elsewhere. By no means I am saying that not living together has resulted in less love or less harmony , NO ! . All I want to say is people are living separately and “expecting” to live separately now a days.  This will only rise , and not come down by the time you retire.

So the conclusion is “There are higher chances that you will be living separately and not with your kids , by choice or by society structure , unless you are living in smaller towns and villages.”

Change in perception

Lets look at how people today feel about their retirement in coming years . according to a poll on this topic which was taken by as high as 412 unique participants and you will be amazed to hear that as high as 83% said that they would like to be self-dependent and want to save all the money they would require in their retirement . Around 10% said that this is the first time they are having any thoughts about their retirement after seeing the poll and just 7% people expect to be fully or partially dependent on their children for their retirement. Which shows us that as high as 93% readers on this blog who participated in the poll want to be self dependend and plan their retirement themselves. Look at the poll results below .

 

 

 

 

 

 

 

 

 

 

 

 

 

So whats the best Investment you can do today which will make sure you live happily in retirement ? If you thought that it’s some financial product or a strategy to make some extra bucks , you are wrong ! . I am talking about your Health here . Note that reaching destination is important, but after reaching the destination if you don’t feel joy and happiness and are not able to enjoy the fruits later , all the hard work you will put for reaching for destination will go waste.

You will be living for 25-30 yrs minimum in your retirement, Now if you have all the money , but no proper health at the end, you will not be able to eat what you want, you will not be able to roam around places , you will not be able to enjoy each moment of your life , what’s the use of all your hard-earned money in that case ?  I would say all your efforts will be waste. This is one serious point I want you to take home today . Think about it .

As far getting ready for financial health is concerned then better fill the form provided here or use free call utility to discuss you plans and requirement with our experts.