Some activities cannot be done all of a sudden. We cannot start to live a retired life immediately after retirement. Though retirement is a known and expected stage in life, living a retired life requires a lot of planning in advance. Unfortunately, inflation is a factor that does not stay put till we retire only to retire after we retire.
Retirement by itself is an important stage in life which gets stressed out due to the rising inflation levels. Increased cost of living adds pressure even to live a basic life meeting just the necessities. All these will make us feel sorry that we did not plan for our retirement well in advance. However, it becomes too late to repent since the post retirement life would have already started.
Planning for retirement right from the early stages in life is of utmost importance. Let us look at some ways through which we can plan for our retirement in a prudent manner.
1.Planning based on Life expectancy
It is a fact that none of us know how long we will live. However, it is important that we plan for our post retirement life basing the same on probable number of years we may live.
Many old age people suffer due to lack of money to support their post retirement life purely due to the fact that they did not plan for their retirement at all. This is where Financial Planning becomes an important aspect in one’s early life.
2.Right age to start for planning retirement
One of the main questions that come to our minds is about the right age to start investing towards retirement.
Your Financial Planning pertaining to retirement must start at a young age and as soon as you draw your first salary.
Assessing investment requirement for the fag end stage of life might be a challenging task while beginning active life at a young age. However, remember, without a basic plan, any aspect of life can become haphazard.
3.How to start saving for your retirement
Assess the inflation rate of the past and observe the current trends in the same. Based on the trend, calculate the probable inflation rate in the future when you will attain retirement age. Work backwards and start savings in small chunks right from your first salary.
Take the advice of a Financial Advisor pertaining to where you can initiate investment for retirement.
4.Ideal investment options to save for your retirement
Investing in Systematic Investment Plan and other Mutual Fund products is a good option to build huge chunk of wealth over a period of time. Since Financial Planning for retirement involves reasonable number of years, investing in SIP will be an easy task on the shoulders.
Financial Planning for Retirement must be done in a meticulous and continuous manner. Consult an Investment Advisor periodically to understand where you stand in the financial race.
The negatives of starting late
Retirement planning right from an early age helps you cope up with the inflation rate that prevails at the time of your retirement. Particularly when you invest in products like Mutual Funds you are in the best situation to win over inflation in a comfortable manner.
When you start your Financial Planning for retirement in a delayed manner, inflation would have taken the lead by then. It becomes tough for you to patch up with the deficit between where you financially stand post retirement and the then prevailing rate of inflation
Inflation is the biggest risk
One of the main reasons why we recommend saving for retirement right from your first salary is Inflation. Inflation is one of the biggest issues all countries in the world experience.
Even if we plan to start saving towards retirement as early as 20 years in advance, we need to focus on the inflation trend carefully. If the inflation is steep, it is a pointer that we need to save more.
At the end of the day, it is all about having a decent retired life that can support all our old age needs in an adequate manner.
Permutation and Combination of savings period
Retirement is a constant. Whether we like it or not, we are ageing every passing day. We tend to retire at the specified age. We know that all these are absolute truths. Then, prudence is in saving huge chunks of money to support ourselves post retirement.
If you plan to sustain for say 4 years post retirement, start saving 4 years in advance during the pre retirement stage. Applying the same logic and extending the period, if we anticipate live for more than 15 years post retirement then we need to start saving 15 years in advance during the pre retirement stage.
Unless Financial Planning is done based on the above logic, we will fall so short of money post retirement that all logic will defy us. Work out the best permutation and combination to suit your financial position with the help of an Investment Advisor.
The final word
Ageing brings with it health issues. Ageing brings down our earning capacity. It is during our post retirement stage that we will be deprived of income but our expenses will increase multifold in many aspects. Our medical expenses will be high and if we have not planned for a Medical Insurance, it will be impossible to balance. It is during this final stage that we realize the importance of starting early when it comes to retirement Financial Planning.
Invest in high yield financial products like Mutual Funds right from your early days. Earmark a portion of your investments towards your retirement. Avoid depleting the same for any other purposes during the ups and downs of life. Every penny not spent during the hay days will help you spend your retirement in a peaceful manner.
Last but not the least, have a Financial Advisor by your side right from the day you start saving. He will make retirement Financial Planning a cake walk for you through every stage in your life. Happy retiring.