{"id":502518,"date":"2024-02-21T15:48:33","date_gmt":"2024-02-21T10:18:33","guid":{"rendered":"https:\/\/apnlive.com\/?p=502518"},"modified":"2024-02-21T15:48:33","modified_gmt":"2024-02-21T10:18:33","slug":"retirement-planning-steps","status":"publish","type":"post","link":"https:\/\/apnlive.com\/featureds\/retirement-planning-steps\/","title":{"rendered":"Steps to effective retirement planning"},"content":{"rendered":"\n

Retirement planning is a critical aspect of financial stability that often goes overlooked until it’s too late. In India, where the culture of savings is ingrained yet formal retirement planning is still evolving, understanding, and initiating a retirement plan is more crucial than ever.<\/p>\n\n\n\n

The importance of retirement planning depends on ensuring you have adequate funds to live comfortably after you stop earning a stable income. It is not only about saving a part of your earnings but also about investing in yourself. Here are some crucial reasons to begin retirement planning \u2013 combating inflation, securing financial freedom, managing medical expenditures, maintaining your living standard, supporting family requirements, meeting post-retirement goals, preparing for unanticipated circumstances, and leaving a legacy for dependents.<\/p>\n\n\n\n

Here are ways to effectively plan your retirement –<\/strong><\/p>\n\n\n\n

\u00d8 Utilise an online retirement calculator<\/strong><\/p>\n\n\n\n

An important instrument for planning, an online retirement calculator<\/strong> <\/a>can assist you estimate how much you require to save to live a post-retirement life. It factors in your existing age, savings, retirement age, investments, and anticipated inflation rates.<\/p>\n\n\n\n

Anjali is looking to retire at the age of 60 with a lifestyle that needs Rs 50,000 per month. Utilising an online retirement calculator, she considers her existing age of 30, anticipated inflation of 6 per cent and prevailing savings. The calculator estimates she needs a corpus of approximately Rs 2.5 crores to sustain her retirement life, helping her strategise her savings and investments accordingly.<\/p>\n\n\n\n

\u00d8 Start early<\/strong><\/p>\n\n\n\n

The sooner you start, the more you benefit from compound interest. Even starting small can lead to substantial growth over decades.<\/p>\n\n\n\n

Imagine Rohit, who starts saving Rs 5,000 a month at age 25 in a mutual fund that averages an 8% annual return. By the time he turns 60, his investment would have grown to over Rs 1.50 crore, thanks to compound interest. In contrast, if Priya starts saving the same amount at 35 under the same conditions, she would accumulate about Rs 67 lakhs by age 60. The decade-long head start allows Rohit’s investments more time to compound, significantly impacting his retirement corpus.<\/p>\n\n\n\n

\u00d8 Create a retirement budget<\/strong><\/p>\n\n\n\n

Estimate your post-retirement expenses, considering inflation and changing lifestyle needs. Including fixed expenses, healthcare, leisure, and unexpected costs.<\/p>\n\n\n\n

Vijay, nearing retirement, lists down his monthly expenses including groceries, utilities, healthcare, and leisure activities like travel and hobbies. Considering inflation, he predicts his current monthly expense of Rs 30,000 will rise to Rs 80,000 by the time he retires. This projection helps him understand how much he needs to save to maintain his lifestyle post-retirement.<\/p>\n\n\n\n

\u00d8 Opt for a pension plan<\/strong><\/p>\n\n\n\n

Investing in pension plans offered by insurance companies can guarantee a steady income post-retirement. They also provide tax benefits under Section 80C.<\/p>\n\n\n\n