Retirement is a time to catch up on things and experiences, you have missed in life. Your hobbies neglected for decades. Your holiday trips which you have kept postponing. You always said tomorrow when it came to those holidays. Unfortunately tomorrow never comes. Now finally you’re retired. You have all the time in the World. There is no better time to go on that long forgotten holiday.
But aren’t you forgetting one thing. You need money to go on holiday. You need money to pursue your hobbies. You need money for everything. The only way you can get this money… Retirement Planning. “By Failing to prepare you are preparing to Fail”.
Expenses never reduce. They always increase. But don’t you require less money after retirement? You don’t have to pay for your children’s food and college bills. If you believe that your expenses will reduce after retirement, you are making a serious mistake. After retirement your health expenses would generally increase. Medical expenses in your elderly years can be very high. You need to save for these high medical expenses, in your younger days. This can be done only through sound retirement planning.
You must also avail a health insurance plan when you are young and healthy. You must avail a health insurance plan with a guaranteed renewability clause, when you are young. This plan will help settle your medical expenses after retirement.
Inflation is the general rise in prices of goods and services with time. You must account for inflation in your retirement planning. Inflation measured by the Consumer Price Index (CPI), is around 5%. In future inflation is expected to rise. You must factor a higher inflation in the future, when you plan for retirement. If you do not account for inflation, all your savings will be blown away and you will have no money to spend after retirement.
There is a famous saying “A time and place for everything”. The same holds true for retirement planning. You need to plan for your retirement, when you are young. The best time to do your retirement planning is when you are in your early 20’s and 30’s. The earlier you plan for retirement, the more money you have at retirement. The longer you delay retirement planning, lesser money you have at retirement. So start early and save up for your retired years. Remember, it is never too late to start your retirement planning.
SEE ALSO: Types of Retirement Plans
This one is difficult. How can you estimate your life span? Difficult or not, you have to make a rough estimate on how long you and your spouse would live, after your retirement. You have to save accordingly.
If you estimate your life span incorrectly, you would not have sufficient money to enjoy your retired years. You must err on the side of caution (make an estimate that you will live for more number of years after retirement). This ensures that you have sufficient money to retire and enjoy your retired life.
Investing in equity is risky, but the rewards are great. Investing in equity over the long term, say 3 to 5 years is quite safe. The returns you get from an investment in equity, helps you easily beat inflation. This makes an investment in equity, good for retirement planning. If you don’t invest in equity, the returns you get might not be sufficient to beat inflation. You will not have money to enjoy your retired years.
Avoid these mistakes when you plan for retirement and enjoy a good retired life.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
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