Retirement is a golden word for hard-working professionals who spend 8-10 hours every day at
work. For them, Retirement could mean relaxing at the balcony of their home
with a cup of coffee and gossiping with their spouse and going on vacation with
their friends and family. In short, retirement is the end of the daily struggle
at work.
"There is a whole new kind of life ahead, full of experiences just waiting to happen. Some call it "Retirement". I call it bliss"
- Betty Sullivan
However, the problem
doesn’t stop there. It will be a golden era for those who have planned their
financials for their retirement efficiently and look after their health properly.
As with retirement, daily work struggle may end, however, it will bring up many
challenges for those who have not planned their retirement as a source of
income will become limited after retirement.
In this article,
we will go through the different aspects of Retirement planning.
Why Retirement Planning is required?
Everyone is dreaming
of a quality post-retirement life, then retirement planning should be on your
priority list. Often in our busy schedules, we forget to anticipate the future
and keep deferring our plans. But what we need to realize at the beginning is,
the sooner we start, the more we shall be able to accumulate till retirement.
Here are some of
the reasons why retirement planning should be on your priority list:
- Decreasing Interest Rate - We all are witnessing that the
interest rates are falling across the Globe for last many decades and it will
be continued in future as well. This will directly impact on the amount of
corpus to be accumulated for retirement. As interest rates are falling, one must
accumulate a significant amount of corpus.
- Increased cost of living – Over the years, our cost of living is getting increased by one or other reason. Along with inflation factor, factors like standard of living plays an important role in this. (eg. Many families have opted for overseas vacations over vacations at nearby places).
- Higher Medical cost - With rising age, come new and health problems.
Medical expenses make a huge dent in your finances post-retirement. Studies
show medical inflation is 14-15% a year. This means health costs potentially
become 4 times of what they were just ten years ago.
- Increased Life expectancy - Gone are the days when the life expectancy was only 60. With a change in lifestyle, the average life expectancy has increased as well. So, naturally, you will need more funds for your future.
- Nuclear Families – In earlier days, the elderly could rely on monetary support from a big family. The culture of the Indian families is changing as couples are going nuclear and staying separately. They are also having less children. In the upcoming years, there may not be many relatives to take care of you as a senior citizen. Children, when they grow up, want to relocate for jobs elsewhere. Plus, the pressure to earn money and have a decent lifestyle would not give them enough time to allocate for parents and elders.
What are the steps to Retirement Planning:
Retirement
planning makes you prepared for life after paid work ends. Such planning has
some key components. Let us have a look at them one by one.
- Make a list of your current expenses – Your current expenditure is an indicator of your future expenses. Don’t forget to include your investments and savings.
- Make an Emergency fund – Unplanned expenses like medical or hospital bills can burn a hole in your pocket. Planning can help mitigate some of it.
- Use equity investments for long term wealth building – Use the growth potential of equities to give your investments a boost over the long term and help create wealth.
- Start early – Get time on your side by starting early. The sooner you begin, the more time your money gets to earn interest and thus grow through the power of compounding.
- Don’t break into your retirement corpus – It is very tempting to dig into your retirement funds in an emergency. With proper planning, you can plan to avoid such situations.
What is the importance of Insurance planning in your retirement:
Insurance planning
(Protection management) is one of the major factors in planning your retirement.
At its core,
retirement planning is all about ensuring that when your salary stops, you have
an income source to take care of monthly expenses. This is the basic motive of
all retirement plans. If you have adequate income post-retirement, every
financial need can be taken care of with full confidence.
Life insurance plays a big role in
holding a retirement plan together. For most individuals, retirement planning
is something that is related to them and their family, including their spouse. Along
with life insurance, health insurance is also an essential part of protection management
as it may protect your corpus during medical emergencies.
It is advisable
to take adequate Life and Health insurance at the early stage of retirement
planning as a part of protection management.
Quick tips for Retirement Planning:
Hope this article has helped you to understand the aspects that one should consider during their Retirement Planning.
If you have not yet started your Retirement planning or having any query, you may contact us on +91-7021741077 or email us on investments.mota@gmail.com. Our team will be happy to help you with Retirement planning.
