For most youngsters, nowadays, retirement seems to be a fairly distant reality. Thus, it is natural for them to believe that planning for retirement can easily be pushed back some years. Further, for someone in their 20s, starting with a career, it is not uncommon to feel too young to plan for their retirement, at this point in time.
Regardless of your age or health, however, retirement planning becomes essential, once you realize that eventually you will retire, and your monthly pay cheque will no longer be credited to your account. Therefore, you need to start saving as soon as possible in your working years and build a substantial corpus by the time you hang your boots, to avoid any financial crisis during your retirement years. To help, here are a few moves that will help you retire rich and not just retire.
Plan Actively And Save Adequately
Indian family and society values are the reasons, why most of us feel obliged to save for life goals such as buying a home, providing for our child’s education and their marriage. However, only a few of us count retirement as a goal and save for it.
As a young professional, you may be a few years away from starting a family, yet you need to view your retirement needs as an important goal. Therefore, you need to align your savings and investments accordingly.
How much you save for your retirement, depends on factors such as the lifestyle you want post-retirement, your present-day living expenses (excluding any EMIs or expenditures on work travel), the expected rate of inflation and years remaining for your retirement.
You may start by saving and investing at least 20 percent of your monthly income, and gradually increase it to 50 percent, as and when you finish paying off all major liabilities.
Invest Wisely Before And At Retirement
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If you believe that you only need to save diligently, to cover expenses for the retirement years, think again. Depending on your retirement age and your lifestyle needs, there’s every chance that your savings would quickly drain out within a few years. Then what?
To avoid this, you need to maximize those savings by investing prudently in a retirement plan mutual fund. Reputable insurers including Max Life Insurance offer a variety of investment options that allocate your money into high-performing equities so that you can avail significant inflation-beating returns in the long term.
That said, it is again crucial to make wise financial decisions, once you hit retirement. You need to make careful investment choices with the accumulated corpus so that you let your finances grow while you make regular withdrawals from the corpus. It becomes essential that your corpus outlasts you.
Prepare For Healthcare Needs
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In the initial years’, post-retirement, your health may not seem that big a concern, and you may not need to spend much money on medical treatment. However, as your age progresses, medical expenses are bound to shoot up exponentially. Further, in case of critical illnesses, even a single hospitalization can be enough to wipe out a significant portion of your savings.
Therefore, you need to prepare yourself financially to tackle the healthcare costs after retiring. First, you need to purchase an adequate health insurance policy for yourself and your spouse. The earlier in life you buy a health cover policy, the better deal you can avail regarding coverage, premium payable and discounts.
Next, you may augment your existing medical policy by getting a critical illness policy, which would pay you a lump sum amount, enough to take care of treatment expenses in case of major health concerns such as stroke, heart attack, cancer or kidney failure.
Go For Automated Savings
As a young professional, the best way to achieve your long-term goals, especially your retirement, is to go with automated investing. Instead of investing a lump-sum from time to time, therefore, you may choose to contribute towards SIP’s through Electronic Clearing Service (ECS).
An amount of your choice will be automatically deducted from your account on a predetermined date every month under this option. You can continue with the process for a fixed number of months or even go with it on a perpetual basis. That said, you can opt out of the process whenever you feel the need.
Don’t Just Retire, Retire Rich
Retirement is supposed to be a time of care-free living, and the time to make that happen is now, while you are young and working. Therefore, you need to realize the quantum of the lifestage that is retirement and make enough preparations while there is time.
Subsequently, you need to maximize your savings by investing them in a retirement plan that helps allocate your money primarily into equity funds. Later, you can switch to debt funds to protect your capital gains from market fluctuations.
To make sure that you have the best retirement plan to help you realize your goals, be sure to compare the various plans available online and then choose one. Remember, you can be young without money, but you can’t be old without it, as Tennessee Williams puts it.
DISCLAIMER: While we have taken steps to check the accuracy of information & investment details shared here, the views shared here are of the insurance company. Do check for the details before buying insurance or investing.