“Retirement is when you stop living at work and start working at living”

Retirement is like the second innings of life. We all dream of those days when we no longer need to work 9-5 jobs, but instead can tend to our gardens and read books or just travel.

But, a good retirement requires hard work and planning. While most of us work hard, how many are really planning for it?

RETIREMENT PLANNING

Retirement planning is a process of setting retirement income goals and following them with the actions necessary to achieve those same goals.

This process includes:

Understanding your time horizon: When do you want to retire? How long do you have to plan for it? Your current age and expected retirement age provides the base for an effective retirement strategy.

Determining your retirement income goals & needs: you should have a realistic expectation of your retirement needs & set your goals accordingly.

Take into account the inflation, medical emergencies, and the lifestyle you want for your retirement days. Understand that in India, there is very little support provided for retired people by the government. Also, with increase in nuclear families, the support from family or children should also be determined realistically.

While calculating your required income for retirement, take into consideration all the above factors.

Accounting & determining your expenses: How do you want to spend your retirement days? Do you want to travel? Or buy a holiday home in a beautiful country side or even abroad? Or renovate your native home?

Determine the expenditure for the lifestyle you want, account for inflation, and derive a realistic number.

Identifying your sources of income: Once you have determined your future expenses, identify how you will pay for it? Do you want a regular stream of income coming in from your investments? Would you be getting regular salary from some side hustle?

We suggest creating a retirement fund which can provide a steady monthly or yearly source of income, so even when you are not working you are financially independent.

Managing your assets & risks: While planning for your retirement you need to take into account your risk tolerance.

Some products like equity products have higher risk but might give you better returns. On the other hand debt products have low risk but may give comparatively lower returns. You need to ask yourself if you are ok with taking some risks to arrive at your ‘magic number’.

After considering the above factors, one needs to create a disciplined investment plan to have a care-free & fun retirement!

BEST WAY TO INVEST FOR RETIREMENT

Here is a simple guide to the best way to invest for your retirement:

CONCLUSION

Retirement planning can start at any stage in life. But the earlier you start the better, as the power of compounding helps you in creating a bigger fund with smaller investment amount.

Haphazard investments may not give you your desired income on retirement. Planned retirement portfolio taking into account your goals and timelines is essential for a secured stream of desired income.