What comes to your mind when you think of retirement? Peace? Luxury? Health?
For many individuals, retirement is the golden time when one can finally relax and pursue their leisure goals. With no active income, this is a phase in life where one needs to be financially well-prepared in order to live a hassle-free retired life.
However, the Indian youth do not seem keen on planning for their later years. According to a survey conducted by Max Life Insurance India in 2021, 80% of young Indians in urban areas are not prepared for retirement. It revealed that 1 in 4 have not even thought of retirement, which highlights concerns over financial preparedness.
The young population places greater emphasis on other financial needs like a kid’s education, wedding, purchasing homes over retirement. The focus on current satisfaction which when combined with a “You only live once” attitude can leave insufficient funds for future safety.
Easier to save
Firstly, it is easier to save for retirement during the early stages of one’s career when there is no pressure to support a family and minimal health expenses.
Let’s take the example of Mr and Mrs. Rahul who are currently 35 years old. They intend to retire at 60 years and have annual expenses of Rs. 6 lakhs (Rs. 50k per month). Assuming 7% inflation, expenses at retirement can be estimated to be around Rs. 23 lakhs. With a life expectancy of 85 years, the corpus required would be around Rs. 5.7 crores in order to receive inflation-adjusted income for the post-retirement years. Yes, that’s quite a huge sum but that’s where the importance of early retirement planning comes into place.
Better inflation adjusted returns
Second, India has been witnessing a steep cost-of-living for years now which hurts the retired class the most. Inflation can eat up the value of your money and impact your lifestyle, medical and other expenses in the future. Strategically mapping out your retirement can help tackle inflation and maintain your future expenses and savings.
Avoid financial dependence
Lastly, many Indians are largely unprepared for retirement as they rely on their children to bail them out during difficult financial circumstances. This financial dependence can create troubles between families. Thus, selecting and investing in the right retirement plan means you will not have to depend on anyone else for your needs.
So, planning as early as you can even with a small amount of money can go a long way to accumulate a significant pool of money.
First, it is important to accept that retirement is an inevitable scenario and not having a financial plan can result in undesirable consequences for you and your family.
Second, identify and quantify your retirement goals to see where you stand and where do you have to reach. This can be based on several factors like age of retirement, inflation, lifestyle, taxation etc. Using a systematic approach such as goals-based investing can help in your journey of accumulating wealth towards the decided retirement corpus amount.
Third, investors need to adopt to simple but intelligent investment techniques during their working years to build an appropriate nest egg. Below are some common ways to start retirement planning.
“Invest in wealth for a better tomorrow!”
Retirement investment is a matter of choice and working towards it is key to leading the retirement life you hoped for. The secret is to start early. Plan your retirement under the guidance of a professional financial advisor who will help you build a portfolio that safeguards your interests while ensuring high returns.
Managing your finances in today’s digital landscape can feel a bit like juggling flaming swords…
When you think about all the big financial goals that stretch out over the course…
Despite its ups and downs, cryptocurrency is still a leading financial trend. Many have praised…
There is no denying that life can be difficult. It can be challenging to balance…
There is a method in the chaos of intraday trading with careful strategies and rules…
Investing is a powerful tool that can help individuals grow their wealth and achieve their…