Retirement planning calls for being prudent with finances and building the necessary corpus for the future to be financially independent. So, if you are looking for retirement planning tips, you can come to the right place.
Today, the youngsters of the modern generation are much more financially independent than their parents were at the same age. Also, the current generation is much more equipped with the financial knowledge to plan their future well in advance. Today, people don’t see retirement as a phase of life where they can sit back and enjoy living off the pension, but people take it as an opportunity to pursue their passion.
So, if you too wish to live a financially independent life, you must plan your retirement well so that you can peacefully retire from work and start living a life you always wanted.
Here are a few tried and tested steps to enjoy your second innings.
List down your estimated future expense
The first step in creating a retirement plan is to list all your expenses in the order of priority that you may incur post-retirement. Indeed, you may not have a steady flow of income, but you can still live your post-retirement life as you want. Be it your children’s wedding, a world tour with your beloved, owning a house in your favourite travel destination, or taking up organic farming.
You can accomplish all your goals; if you start planning early, designate a budget for all the expenses and set a timeline to realise those goals.
Be contingency ready
Often retirement planning gets derailed due to an unexpected expenditure that drains off all the savings. As a smart planner, you must account for such contingencies in your retirement planning and have a reserve fund to meet the emergency expense. Being prepared for the unexpected will help you deal with the situation better without compromising on your other goals.
Widen your investment portfolio
They say, ‘if you have to make an omelette, you have to break an egg,’ similarly, if you wish to accomplish your financial goals, you must be willing to take a risk and shy away from investing only in low-risk investments. Traditional investments may safeguard your funds, but it may not help you grow the funds enough. Experts recommend investing in equity instruments to earn inflation-adjusted returns and accelerate your funds’ growth.
You may be aware of the phrase, ‘early bird gets the worm.’ The same principle applies to retirement planning. The earlier you start, the longer duration you have to allow your money to grow. When you start early, you can take more risks and have the benefit of time to overcome the slump and recover losses. Treat your retirement with as much importance as your current goals and start investing a small amount regularly towards your retirement goals.
Don’t liquidate the retirement corpus
One of the most common mistakes that people commit, which puts them off from achieving their retirement goals, is breaking into the retirement corpus in between. Most people tend to withdraw their PF account balance while they switch jobs, instead of transferring it to the new employer.
When you liquidate the retirement funds, it may have a huge setback on your long-term goals. Hence, it is paramount that you avoid the lure of digging into the retirement fund for any luxury purposes and remain focused on accomplishing your retirement goals. Being financially disciplined and investing regularly is as important as choosing the right investment.
Retirement planning is not as hard as it may sound. It would help if you had a clear goal in mind and a route-map on how you wish to accomplish it. You can consult a financial advisor to devise a retirement plan based on your specific goals.