Retirement planning is defined as an early financial preparation that will help you live a stress-free life in your post-retirement journey. During our entire lifetime, we have to plan for various financial goals, such as marriage, children’s education, their marriage, new house, etc. Out of these, one important stage of life is retirement. Retirement means the time after our working age is over. Good planning is also needed for a good retirement, thus to fulfil these goals and live comfortably post-retirement, retirement planning is essential.
Whether the job is private or government, retirement happens at a certain time in both. After retirement, your savings are your strength. Therefore, it is important that while you are in a job, you should save enough money in that period so that in old age, when your body is not capable of working hard, you can fulfill all your needs from your savings. You should have so much money that you never need to take financial help from anyone.
What is Retirement Planning
Retirement planning is a process that helps you arrange funding for your post-job days. Under this, you save and invest for your future days today, so that you can live a better life even when you do not have any source of income. It prepares you to enjoy life in your retirement years with financial freedom and financial security. In this type of planning, you save and invest keeping in mind your financial goals, expenses and sources of income.
When to Start Retirement Planning
The general retirement age for employed people is 60 years. If you get a job at the age of 25 to 30 years, then you should start thinking about retirement at the age of 35-40 years. This stage of age is better because by this age you start understanding about the expansion of your family and along with this, your health also remains good at such a time.
On the other hand, if you have crossed a certain age, i.e. you are thinking about it after the age of 30, then at this time you will have many responsibilities and installments, the payment of which will take up most of your income. In this situation, you have to take some kind of step keeping in mind both your pocket and expenses.
Why your Retirement Planning is Important
Today we are rapidly moving towards the digital world. In the future we will be less emotionally connected and more electronically connected. We are rapidly adopting western culture. Therefore, in the coming times, western culture will also affect our lives and planning to take care of ourselves after retirement will also be necessary. If your children help you after retirement, it will be a good thing. But it is important to prepare yourself for post-retirement. It is good to be positive about your future, but it is also practical to anticipate that there may be some obstacles in your life where you may need money. In such a situation, you can be prepared for future financial needs in advance by paying attention to your retirement plan.
How to do Retirement Planning
- First of all, you will need to set your financial goals. According to your age, these goals can be both short term and long term. You have to choose what kind of life you want to live after your retirement, and how much funds you will need to live that kind of life. Whatever amount you reach, keep the inflation rate in mind, because in the coming time, the value of the amount decided today may be higher due to inflation.
- Determine the age of retirement: Before doing any kind of planning, it must be clear in your mind at what age you are thinking of taking retirement. For most people, this age may be 60, but for some people it can be less or more than this. Whatever the age, while planning your retirement, you have to first determine the age of retirement.
- Risk management can also be an important part of retirement planning. You need to diversify all your retirement investments to reduce the risk involved.
- While planning for retirement, it is important to evaluate your current financial condition. This includes all your savings, investments, property and liabilities. Based on this, you can estimate how much of your target amount you already have.
- Investment plan can include such instruments which can create a good long term corpus by investing your savings in various assets. In this, you can keep in mind various investment instruments like mutual funds, PPF, EPF, stocks, bonds etc.
- You need to review your retirement plan regularly and make some necessary changes if needed.
- Retirement corpus means the amount you will need after retirement. For this, you have to keep in mind your future expenses and income sources. If your expenses are more than your income sources, then you have to choose the necessary retirement instrument for the remaining expenses.
Conclusion
Retirement planning is an important aspect that helps you ensure your future financial security. Hopefully, from this post you have got useful information regarding What are the tax rates on mutual fund. If you have any question regarding this post, then you can tell us by commenting in the comment box given below. Your feedback and suggestions are welcome as always. Thank you.
