How to Plan for A Successful Retirement?
Posted by sagar on August 14th, 2017
Retirement is when life truly starts. There are no deadlines to finish, no work pressures to stress you at night, and no more alarms to wake you for work in the morning. It’s the most relaxing time which you can ideally invest in yourself. There’s plenty of time to get hooked up to a new hobby, learn a new craft, or follow that long-lost dream to explore the world. After all, what’s the point of slogging your entire life and then not getting to reap the benefits of your labour later?
But all of this can only be successfully achieved if you have enough monetary funds. To have a smooth retirement in the future, you need to start planning for it today. Retirement planning is not given its due importance, especially in India, where the common ideology of life is to “just wing it”. However, improper Unless you want to enjoy post-retirement life with sufficient money in your bank account, you need to delete the concept of ‘jugaad’ from your brain permanently and focus on your retirement plan.
We know it can be a daunting task, and you might not know where to begin with. There is no dearth of such plans in the market, however, picking a robust retirement plan in India is like finding a diamond in the rough. Before choosing a pension scheme for yourself, these are the questions you should ask yourself.
What is a retirement plan?
Also known as a pension plan, it is a savings and investment plan that provides income during retirement. By systematically storing your cash and investing it, you create a neat cache for yourself to sustain your future lifestyle and goals. Retirement plans not only provide you regular pay-outs in the form of pension in the post-retirement age but also offer maturity benefits in the form of lump-sum amount, which you can later use to your long-standing plans such as world travel, financing a second home, etc.
How does it work?
A pension plan has two stages. First, where you start investing your savings in the plan as premiums. This is when you’re still earning and have the funds to keep aside out of your budget. The first stage is crucial and should be started as early as possible. The earlier you start planning for retirement, the larger your corpus will be. The premiums you pay also help you gain tax benefits.
The second stage begins once you retire. At this stage, your pension scheme will provide you with regular income to sustain yourself. You have enough flexibility to withdraw money as you like or opt for regular pay-outs, similar to a salary.
What to avoid while planning?
Not assessing the amount needed: The first step for a successful plan is to calculate the approximate amount you would need in the future. Weigh in your lifestyle, goals, inflation, medical condition, and any other expenses, to properly gauge the amount you need to invest it. To make this tedious task easier, there are several premium calculators offered by insurance companies online.
Not counting debts: It’s better to sort out any debts you may have from your loans or EMIs so you don’t have to worry about it during your retirement. If the debt is left off, it will eat a major chunk off your retirement savings.
Not investing right: This is with regard to the time duration of your investments. It is more prudent to let your investments grow till the maturity date to get maximum returns. It helps if you have a diversified portfolio with a range of different investment plans. The key is to withdraw from the investment only in times of dire need.
