Gathering a solid retirement corpus is necessary as it helps you with your future financial needs and will help you get through a phase when you won’t have a steady income source and might be living on a fixed budget. A retirement corpus is to ensure that even when you are not working and completely off your 9 to 5 job, you still have the solid financial support that will help you lead a healthy lifestyle during your sunset years.
Irrespective of what your post retirement financial goals are, you ought to ensure that you have money saved in your retirement kitty so that you set yourself free from all of your financial obligations and lead a stress free post retirement life.
Here are a few factors you must consider while planning for retirement –
Start your investment journey early – The biggest mistake which people do when planning for retirement is that they wake up just a few years before you are about to retire. Although it is true that no one wants to think of retirement when they are in their prime, they must understand that sooner or later they will find themselves nearing the age of retirement. The early you start investing the lesser investments you will have to make a month on month as opposed to those who may have to make hefty investments to reach their retirement goal if they start investing at a later stage in their life.
Prioritize your goals – The retirement corpus may not be solely for you. You may need it for other long term financial goals as well like your daughter’s marriage or for her higher education. Hence, one must prioritize their goals so that they can effectively plan their investments accordingly and target their financial goals in a better way.
Do not take retirement planning lightly – Do you want to rely on your children and become a liability for them when your retirement? Or do you want to keep visiting your estranged relatives for financial dependency post retirement? No, right? If you do not want to face any such scenarios then you must keep retirement planning as your top priority.
Consider inflation – Do not remain satisfied with your current savings thinking that they will suffice all your future post retirement wants and needs. If you wish to continue to the same lifestyle that you are doing right now, then you will have to plan your investments keeping inflation in mind.
Build a separate emergency fund – Investors must understand that in old age the frequency of doctor visits might increase. To tackle life’s unforeseen exigencies investors need to ensure that they build a separate retirement budget. They can consider debt mutual funds like liquid funds that are highly flexible and offer immense liquidity. This way they can immediately liquidate their assets in case of a medical emergency and will ensure that their retirement corpus remains unaffected.
Consider retirement mutual funds – Retirement mutual funds invest in a mix of equity and debt instruments. This way one does not have to worry as the portfolio is not entirely exposed to volatile like equity funds. Investors can consider a retirement fund that suits their risk appetite as every scheme has a different asset allocation and their exposure to both equity and debt asset classes varies as well. You can start a SIP in a retirement scheme so that you inculcate the discipline of regular investing. You can even use the online SIP calculator to calculate the total assumed returns earned at the end of your SIP investment journey.