People mostly associate 50s with slowing down and retirement. On the contrary it can be quite the opposite. It can be a life full of fun and adventure minus the usual responsibilities. However, just like anything else in life, you sow as you reap. The way you live, work or save in your 30s and 40s plays a big role in enjoying life in the golden years. Here is our list of things that you need to focus on now to have a great life post retirement.
Decide on the retirement corpus value
If you are clear about your end goal, you can achieve it faster. Decide on a rough value or corpus that you feel is required to fund your dreams and ambitions post retirement. You need to consider a host of factors such as number of working years left, kind of desired lifestyle, estimated expenses, likely inflation, life expectancy based on family history etc.
There are many online platforms which offer retirement calculators. These are simple to use and help you give an estimate of wealth required, value of current assets at the time of retirement and also help you with additional investments needed.
When it comes to investing or savings, everything needs to be done today (if not already done yesterday). The saying that early bird gets the worm is 100% accurate in investments. Not only is it easier to start saving when you are younger (and have lesser obligations) it also gives you higher return. The compounding factor works its magic beautifully in such scenarios. Also, your risk-taking abilities go down with age. Hence, earlier the investments, higher is their potential for better returns.
Any investment strategy needs to be in sync with your financial goals and risk-taking ability. For instance,
If you are completely risk averse, then avenues such as PPF, Fixed Deposits and Post Office saving schemes could be the options for you.
If you can take some degree of risk for long-term gains, you can consider investing in equity schemes. An equity scheme invests primarily in a diversified portfolio of stocks with an aim to generate reasonable returns in the long run. You can start with very less amount of investment via Systematic Investment Plan (SIP) and choose a scheme that fits your requirements. The flexibility to make a switch (between debt funds and equity funds) through Systematic Transfer Plan (STP) helps you manage your risk exposure as you age.
Additionally, you can opt for SWP (Systematic Withdrawal Plan) to keep getting a fixed sum of money on a regular basis post retirement.
Adequate medical insurance for yourself (and your dependents) is a pre-requisite for smart retirement planning. It takes care of your financial needs in an emergency and gives you the much-needed peace of mind. Additionally, maintain a contingency fund (about 3-6months expenses) that can take care of your daily needs in case of an emergency(job loss etc.) or a big unexpected medical bill.
No plan can be successful without timely review. Make it a bi-annual or annual practice to review your retirement plan and track the growth of your investments. Make changes wherever required to ensure you reach your ultimate goal.
Remember your parents telling you as kids, “padoge likhoge banoge nawab”. This is its equivalent for your 30s and 40s. Do these things and enjoy a financially secure life in your 50s.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.