The thought of retirement can bring about feelings of anxiety for many people. After having lived a majority of their life earning a stable income on a regular basis, retirement can appear scary, if not worse. The one thought which crosses most people’s minds is maintaining their pre-retirement lifestyle after retiring. While it does sound scary, it doesn’t necessarily have to be so. Retirement is just another stage in life, which if prepared for well, can bring much peace and joy.
Retirement planning is something which everyone has to do, some time or the other. The goal is to create a corpus which will be sufficient to take care of all your needs and also those of your dependents for the remainder of your life. Retirement planning must also take into account the rising inflation, lowering interest rates, both of which combined can easily drive up the amount you require to have towards savings. However, it is not impossible to achieve. Here are some important things to remember which will help you start on your journey to plan for your sunset years.
Start Saving When You’re Young:
When it comes to any type of financial saving, the first and foremost thing to remember is to start young. When you’re young, retirement is not even in the horizon, this is the time you should start saving. By doing this, you will have a much longer duration at your disposal. Start saving as soon as you start earning, even if it is a meagre amount.
The trick to saving right is to cut down on expenses which may be unnecessary. Always keep in mind that health is wealth. However, dining out 3 days a week or going on a shopping spree every week are not necessities. Analyze your lifestyle and evaluate needs that are necessary and weed out the ones which are wasteful. Each month, you must aim to save at least 20% of your income, if not more. Also, try to pay off loans as soon as possible.
Another key to accumulating savings is to save regularly. While for some people, saving regularly is easy, others must cultivate the habit to do so over time. Systematic savings on a regular basis will help you chart out a financial plan, maximize your earnings from the income and also motivate you to be disciplined in your savings. With consistent savings and compounding interests, you can very well see your wealth growing.
Make a Plan:
There can be no retirement planning if you don’t have a plan. Planning is the backbone of everything. Start by assessing your current financial situation and expenses. Calculate the amount you need to save in order to take care of your expenses after retirement. Review how much you already have saved so you can calculate how much more you need to save.
While planning, you must also take into account changing financial situations and needs. Be prepared to review and change your plan according to changing financial situations. Don’t forget to review your plan at least once a year, if not more frequently.
Better Late Than Never:
While the importance of starting to save early cannot be stressed enough, it is also never too late to start saving for your retirement. As they say, better late than never. If you have been unable to save previously, start whenever you can. That way, you will at least have something towards your retirement savings. Invest in retirement plans which can help you build a corpus over a period of years. After all, something is always better than nothing.
Do Thorough Research On Investments Available:
Another important step towards planning is researching on available plans. Beside savings, look for retirement plans which you can invest in to get the maximum return on capital. Don’t just rely on your savings or your pension to tide you over. Seek the advice of experts and invest in plans which are especially designed to help build a retirement corpus. There are several options available like mutual funds, annuity plans, fixed deposit, PPF, life insurance and much more.
Keep Monitoring Your Progress:
After you have chalked out a plan and starting implementing it, your responsibility does not end there. As mentioned before, it is essential for one to review their retirement plan from time to time, not only to monitor progress but also adjust their expenses/savings accordingly. One’s financial situation will continue to change with time. As we grow older and move into higher paying jobs, our saving capacity automatically increases. This is why it is necessary for one to regularly monitor, review and adjust their retirement plans accordingly.
Put a Lock On Your Savings:
Temptation is something which will strike all of us. Whether it is for that new mobile phone, or shoes, or anything else for that matter, when we know we have money at our disposal, it becomes difficult to not spend it. Besides having self-control on your spending, it is also important that you put away your savings under lockdown. Indulging oneself is necessary, but it is also important to know when so much becomes too much. One of the best ways to keep yourself from spending unnecessarily is to put your money away in investments. After your salary is credited to your account each month, you can set instructions to have the investment amount be automatically debited from your account each month.
Retirement is a well-deserved period od relaxation which everyone must enjoy and use to do what they want. Be it to go on vacations, dedicating more time to a hobby, or anything else which makes you happy. Money is the last thing that you should be worrying about and planning right is the key to achieving this.