Monday, December 4, 2017

Do you think you are ready for your retirement?

retirement time
A few decades ago, retirement planning was quite straightforward. People got well-paying government jobs and stayed on in the same company until retirement. After that, the company’s pension plan supported them financially. But times have changed. It is rare to find someone in the same job for more than a few years. As a result, the onus of retirement planning has fallen directly on the individual. But the fact is, many people do not think about retirement planning until it is too late.

Importance of retirement planning

Imagine the following situation. You are in your early 30s. One day, you bounce into your old college friends. You go out and have a blast. The bill is huge. But that’s not a big problem because you can afford it. You know exactly when your next pay cheque will arrive.

Fast-forward thirty years or so. You are retired. In other words, you don’t have a regular source of income anymore. What would you do in case you have to foot a huge expense all of a sudden? If you have access to a good corpus of money, great! But otherwise, you may be in trouble.

Financial independence during your golden years is the main reason why you should start thinking about retirement planning today.

• Rising expenses

Twenty years ago, a cup of coffee didn’t cost more than a few rupees. Today, the same cup could cost you at least Rs 50 in a good restaurant. If you are wondering how it is possible, the answer is quite simple: inflation. In other words, your daily expenses are only going to rise over the years. So even your daily goods such as rice, sugar, coffee and tea would cost a lot more thirty years later. And if you are not prepared for the rise in expenses, you may be forced to change your regular lifestyle to accommodate these changes.

• Rising cost of medical expenses

The other major problem during retirement is the cost of medical expenses. Increase in health problems during old age is a natural phenomenon.Bad knees, poor eyesight, diabetes and arthritis are a few problems that you commonly find among older people. And if you haven’t planned well for your retirement, a substantial chunk of your savings can be spent on medical expenses.

To make matters worse, healthcare costs are spiralling out of control. Some studies show that hospitalisation costs are increasing by 10% every year.

Therefore, the only way to ensure you enjoy a happy and peaceful retirement is through an efficient long-term investment planning.

Create a retirement plan

The journey of a thousand miles starts with a single step. Same is the case with your retirement plan. And the best time to take that step is today.The first step is to identify how much you would like to save for your retirement. This would be based on your current income level and lifestyle. For instance, if your monthly expenses are Rs 40,000, it can be difficult to drastically cut them down after retirement. You might also want to travel or pursue other hobbies. All this can be expensive. Identify your potential expenses and take inflation into account. When you have a rough estimate, you can start your investment plan to achieve your goals.

How investment helps in securing a healthy retired life

One of the main goals of retirement planning is to create a large corpus for your sunset years. You can do this through long-term investments.There are many retirement and pension plans in the market that you can consider. In addition, investing in equities is one of the best ways to do achieve your long-term goals. This is because they have the potential to offer high returns for the long term.

But if you are hesitant to invest in the stock market, equity mutual funds are ideal for you. They are less risky than directly investing in the stock market. Besides, the long-time horizon ahead of you can balance out any hiccups you may encounter on your investment journey.

It is also bestto consider taking out a long-term health insurance to finance any health problems you may encounter in your retired life.

To sum up

In the end, the important thing is to be financially independent in your retirement years. You shouldn’t depend on your children for financial help. On the other hand, it might be a better idea to leave them something from your own side. You can ensure that a part of your retirement savings contributes towards your family’s future.

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