An average human spends 90000 hours at work in their lifetime and almost a 100 hours commuting.
Almost a quarter of the working days are lost every year due to illnesses.
And the couples whose partner spends 10+ hours at work, divorce twice the average age.
But does all this matter if you don’t have everything planned at the proper time?
A significant increase in inflation and high cost of living has made retirement planning on of the important aspects in India.
The word ‘retirement’ brings forth in front of you a 65 year old image with an added stress about the financial management and health crisis as well. You might want to visit the much awaited places and invest money at various stocks, shares and property but something is stopping you. You don’t have the same confidence and surety as you did back in your younger years. You don’t know what might happen, an unknown illness and yet again you started taking your life for granted.
How to overcome this worry and tension?
How to take this mystery out of the retirement planning?
How to plan for retirement?
In this article, I have summed up the entire planning in 5 steps:
- Deciding the retiring age
You need to come up with a reasonable retirement age. Usually the best time is 10-12 years in advance so that you don’t miss out on any wealth creation opportunities. Suppose you are in your thirties and saved up enough then you can always plan for a retirement at 45. But make sure not to be over confident here as there are ups and downs in every industry.
- Set your expected monthly expenses
Setting a particular amount of monthly expense will be much easier if you have a habit of tracking your day to day expenses. Make sure you find out the annual account flow (withdrawals, CC payments and other bills). You can always remove the expenses that won’t happen after retirement like kids’ school fees and set shopping budget accordingly and add other expenses that will occur post retirement like medical insurance. Also do add in the regular yearly or bi-yearly expenses like family vacations. Once you have added up all these figures, the average amount will be the monthly figure we are talking about.
- Executing the retirement plan
Once you have worked upon the expected monthly expenses and retirement age you can adjust the inflation parameters and expected returns on your savings after retirement. In India the inflation parameter could be anywhere around 6 to 10% over a long period of time while the rate of returns on your savings could be anywhere around 3% for savings account, 7 to 10% for long term deposits and 8 to 12 % typically in equities.
Now for the next step, you need to undertake some of the activities within these 10 or 15 year period like paying back all the loans, taking care of the major one-time expenses and set aside money for that and take a term insurance policy (preferably before 40 years).
- Risk planning and management
If the return on the retired investment doesn’t seem sufficient then you can always plan for a part time job or go for alternate investments especially the high risk and high reward ones in case if you are retiring at a younger age. The alternate high reward investments will ensure you returns as high as 10 to 12% annually.
Risk situations as mentioned above are only applicable when you could not take the risk before the retirement. It is highly preferable to opt for such risky investments way before retiring.
- Happily retire after!
This pointer itself is self explanatory but all you need to make sure is to invest in a good medical insurance policy, put in your money into the right investment options and enjoy life.
At times some people tend to develop depression and boredom after an early retirement decision and so a post retirement activity is highly important to keep yourself happy and occupied. You can reconnect with your friends and family and even get enough time rediscover yourself.
Now all this sounds easier said than than done but in reality all this requires lots of homework. Now the above are some of the financial aspects that you need to work upon while planning the retirement planning.
All this being said, rather than saving upon money for vacations and other activities, why not consider a house retirement plan. After all, home is where the heart is and your heart might need to settle down at a place to call it home. So come down and invest at Prarambh – the first ever exclusive lifestyle township for retirement which is carefully planned and tailor made especially for retired people offering care, comfort and security with an eco friendly environment.