All about Retirement Planning
The retirement corpus you need, adjusted for inflation, is likely to be substantial. The
normal PF and PPF savings are not adequate in majority cases. While you plan for
your retirement, ensure you have a decent health cover, start early to get
compounding advantage, gradually de-risk your portfolio as you move towards
retirement, review other financial goals, create regular returns, pay off debts and
focus on retirement savings.
The retirement corpus should sustain your current lifestyle after retirement as well. When you factor
in inflation, you will realize that the amount you need on retirement is much higher.
Here’s what can be done to build your corpus, to help you live a comfortable retired life:
. Ensure you have adequate risk cover for your life and your health. Post retirement, purchasing
insurance policies may be impossible or expensive due to the age factor. Hence you must ensure
you are adequately insured.
. When you have about 10-12 years left for retirement, take a stock of your retirement corpus with
the present level of investment. If you realize you are falling short of the target, then increase
your retirement contribution. When a majority of your investments are exposed to equity
instruments, you can achieve your retirement corpus in a easier manner than when compared to
debt exposure. However, make sure this suits your risk profile.
. When you get closer to retirement, at say, five years or so, you should look at gradually de-risking
your portfolio. This is to insulate your retirement portfolio from volatile market movements,
which can reduce the value of the corpus. However, you must not completely move your
investments to debt, as returns may not match up to inflation. Therefore you should always leave
a small portion of your portfolio in equity-based investments.
. When you are nearing your retirement, you may have to meet important goals of your life like
your child’s post-graduation or your child’s wedding. When you receive any windfalls or inflow of
a large lump sum amount when you are nearing retirement, use this to meet your goals and do
not dig into your retirement savings.
. Invest in instruments which will help you give regular returns after your retirement. Examples of
such investments are fixed deposits and dividend mutual funds.
. Repay your debt before you retire. Home loan is the most important liability of any individual’s
life. If you do not repay your debt before you retire, this will cause a strain on your cash flows
post retirement. This necessitates a larger retirement corpus. Hence make sure you have no
outstanding liabilities when you retire.
. Saving is always worthwhile, and it is never too early or too late to start saving for your
retirement. Retirement savings is usually an ignored concept. Make this a priority. A well-
structured financial plan can help you lead an easy, stress-free retired life.
Happy Investing
Source: Gettingyourich.com
The retirement corpus you need, adjusted for inflation, is likely to be substantial. The
normal PF and PPF savings are not adequate in majority cases. While you plan for
your retirement, ensure you have a decent health cover, start early to get
compounding advantage, gradually de-risk your portfolio as you move towards
retirement, review other financial goals, create regular returns, pay off debts and
focus on retirement savings.
The retirement corpus should sustain your current lifestyle after retirement as well. When you factor
in inflation, you will realize that the amount you need on retirement is much higher.
Here’s what can be done to build your corpus, to help you live a comfortable retired life:
. Ensure you have adequate risk cover for your life and your health. Post retirement, purchasing
insurance policies may be impossible or expensive due to the age factor. Hence you must ensure
you are adequately insured.
. When you have about 10-12 years left for retirement, take a stock of your retirement corpus with
the present level of investment. If you realize you are falling short of the target, then increase
your retirement contribution. When a majority of your investments are exposed to equity
instruments, you can achieve your retirement corpus in a easier manner than when compared to
debt exposure. However, make sure this suits your risk profile.
. When you get closer to retirement, at say, five years or so, you should look at gradually de-risking
your portfolio. This is to insulate your retirement portfolio from volatile market movements,
which can reduce the value of the corpus. However, you must not completely move your
investments to debt, as returns may not match up to inflation. Therefore you should always leave
a small portion of your portfolio in equity-based investments.
. When you are nearing your retirement, you may have to meet important goals of your life like
your child’s post-graduation or your child’s wedding. When you receive any windfalls or inflow of
a large lump sum amount when you are nearing retirement, use this to meet your goals and do
not dig into your retirement savings.
. Invest in instruments which will help you give regular returns after your retirement. Examples of
such investments are fixed deposits and dividend mutual funds.
. Repay your debt before you retire. Home loan is the most important liability of any individual’s
life. If you do not repay your debt before you retire, this will cause a strain on your cash flows
post retirement. This necessitates a larger retirement corpus. Hence make sure you have no
outstanding liabilities when you retire.
. Saving is always worthwhile, and it is never too early or too late to start saving for your
retirement. Retirement savings is usually an ignored concept. Make this a priority. A well-
structured financial plan can help you lead an easy, stress-free retired life.
Happy Investing
Source: Gettingyourich.com
No comments:
Post a Comment