Retirement A New Beginning

Retirement A New Beginning
During the formative years of your life, you were full of dreams and aspirations to do different things. However as you grew older, life added different types of responsibilities on your shoulders and your priorities changed. The things that you wanted to pursue took a backseat because of the lack of time. And now the only time you really get to pursue the things you like such as reading, exploring new places and enjoying new experiences is during a short vacation.

Every vacation is bound within a finite amount of time and it is because of this realization, you take great efforts to plan them in great detail so you can maximize the time that you have.

However, at some point everyone in their life, gets a vacation that is indefinite. This vacation is your retirement. Therefore, your retirement in some sense is your longest holiday

Your retirement like all holidays allows you to pursue things you wanted to pursue, visit places that you wanted to visit and devote time to the things you always dreamed of doing. Your life is no longer governed by the calendar. Retirement finally gives you the opportunity to live your life at you own pace.

Detailed planning and allocation of sufficient funds are required for a good holiday. Similarly you may have grand plans for your retirement. However have you given some thought to the financial planning that is required for a comfortable retirement? The steady source of income your job provides you, stops the day you retire. You need to set aside sufficient funds and create a source of income that will last you for life, so you can confidently retire and have a new beginning in life. Make retirement a choice and not an eventuality.


This quote by George Foreman (Former Olympic Gold Medalist), aptly captures the question that most middle aged people ask themselves. 

Retirement is a holiday that never ends and in some sense, it is the longest holiday that you may enjoy in your life. Like all holidays, to ensure that you make the most of it, you need careful and systematic planning towards your retirement.

Statistics show us that Indians delay planning for retirement, mostly till their 40s1. While one can start retirement planning at any age, it always helps to start planning early. 

Planning early has its benefits. The following are a few:

You stand to gain from the power of compounding. The earlier you start, the longer your money has the opportunity to compound and grow into a substantial corpus.


You can manage the longevity risk by having secured funds. With increasing life expectancy, chances are that your post retirement life will be almost the same duration of your career. You will have to organize the funds for your retirement during your career.


You are guarded against unforeseen setbacks by securing yourself against unexpected expenses on health-care, accidents or any other unforeseen setbacks.


You have help in meeting liabilities without depleting your PF, gratuity and PPF; or even distress sale of assets.


You get the opportunity to build a comprehensive risk-return portfolio depending on your risk appetite.


Helps in developing a habit of saving and the prudent use of money because small savings now will lead to a healthy corpus later in life.


So the big question is how much do you need to save now to secure your retirement?


Basis your age, life expectancy, your income and the current inflation this easy Retirement Calculator can determine how much money you would require at the time of retirement alongwith your projected expenses and how much you need to save now.


Now let us see how a retirement plan works?

A typical retirement plan has two phases, an accumulation phase and a vesting phase. In the accumulation phase, the premiums that you pay are invested in IRDA approved financial instruments that offer the guarantee of your principal and also provide steady returns. 

The accumulation stage is followed by the vesting period where you get returns on your investment. The payouts in this stage can be as per your preference. The following is an illustration of how a typical retirement plan is structured





It is therefore important to start planning early for your longest holiday, so that you can benefit from the power of compounding and build a large corpus by the time you reach retirement age. Planning for a comfortable retirement is equally important as planning for any goal you may have in life.

Happy Investing