The fact that you are reading this article shows that you want to plan your retirement. It’s good to plan your retirement as early as possible in your career because, the earlier you start the better returns you reap. Experts suggest that retirement planning should start when you are in your early-thirties. The bottom line for retirement planning is to understand the kind of lifestyle that you would like to lead when you are enjoying the company of your children and grand-children.
Over years inflation plays a vital role. Your savings amount that is enormous today might seem too small in years to come. Hence you need to take charge of your financial future!
- Set your targets: Before you retire you will have to plan for the events that come up in your life. You might want to take care of your children’s education, daughter’s marriage or an expensive vacation. The to-do list is always long. Consider setting a time line for each of your targets. Set a target amount too. Never underestimate your medical needs over years to come. This would enable you to assess the retirement corpus that is required. So, be reasonable and realistic and make a rational decision based on the available facts.
- Invest regularly: As rightly said an early bird catches more prey. Start early in your career. Make an extra attempt to save on a regular basis. There are a wide number of options available in the market. You can invest in SIPs (Systematic Investment Plans), mutual funds and recurring deposits. Learn about the various options available in the market. Asses your risk appetite. Take into consideration your age and saving potential and invest accordingly for your retirement.
- Subscribe to employers retirement saving plans: These plans allow you to invest regularly on a monthly or quarterly basis. Contributing into these funds provides tax benefits too. This helps to build a healthy retirement fund. There is compound interest provided for the wealth accumulated in these funds. Hence you get a double benefit of compound interest and reduction in taxes. Remember to always check with your employer about the various pension options that are available as part of your company policies.
- Re-evaluate regularly: Discipline is another important aspect for retirement planning. Discipline yourself to diversify your portfolio to keep risks at edge. Monitor your retirement corpus regularly. Develop a temperament to re-look and reevaluate. Goals and targets might vary over years. You might have a new addition into your family with a birth of your child or you might want to reassess your vacation plans. Evaluate your priorities on a regular basis and set targets accordingly. Make sure that you include and plan for every new target that comes up in your life.
- Never dip into your retirement savings before time: It would be unwise to withdraw from your retirement savings before their maturity. In doing so, you will lose out on interest and taxes benefits. By doing so you also jeopardize your retirement plan. In case you change your job, leave your savings in the plan you are enrolled into or transfer it to your new employers plan. Withdrawal of your retirement savings will negatively impact your efforts in achieving financial security and having a retirement kitty in place when you need it most.