3 Effective ways to boost savings for your retirement
Retirement savings in India is still not a familiar concept in India. So, here the question arises are we retirement ready, or is India prepared for retirement? Not actually. There are very few individuals who plan for their retirement or make some investments for retirement purposes. However, with life expectancy rising by almost 5 years every decade and people moving towards nuclear families at a rapid pace, everyone must plan for their retirement despite age, life stage, occupation, demographic, etc. Therefore, paying little heed to retirement savings should be on top priority to lead a comfortable later year.
If you are thinking about how to begin speeding up your process towards achieving this important objective of savings corpus for your retirement era, you can follow these three stages.
3 Effective ways to boost savings for your retirement
- Start Early – Begin Retirement Planning today
- Try not to Assume – Consider the Facts
- Don’t think only about Life Insurance – think beyond it
1. Start Early – Begin Retirement Planning today
Beginning early can hugely affect the accumulation of your retirement corpus. However, it’s undeniably true that the best time to start planning for your retirement savings is receiving your first salary. But almost a microscopic level of us really gets down to keeping this guideline. Regardless of the sum, you begin submitting, starting early is a great option for two reasons. In the first place, the money you set aside early in your investment funds cycle will take a very long time to compound, and this can hugely affect your retirement corpus. To understand this context – even Rs. 50,000 (Rs. 4,000 every month) set aside at 25 years old and left immaculate until the day you resign at 60 can develop to Rs. 26 lakhs at a sensible annualized 12% CAGR.
Moreover, it is recommended not to make halfway withdrawals from your Retirement Fund to pay for your lifestyle. Indeed, even apparently, little withdrawals can make a huge mark on your last asset value. Instead, it is better to stay committed and disciplined, despite the fact that the objective appears to be extremely far away at this point.
2. Try not to Assume – Consider the Facts
It’s normal for us to focus on a discretionary number such as Rs 1 crore or 5 crores and make that our retirement planning objective. As a result, our savings funds are usually unstructured. However, this is not the right way; one should sit and plan or even take help from a financial planner to plan retirement savings effectively. Though this is not an easy task, one can manage to estimate retirement savings based on today’s lifestyle expenses and calculate inflation. In order to make the plan towards the retirement savings more robust, one needs to consider the PF savings being made, the maturity benefit amount of your life insurance policies, and other expected returns. You might be shocked to observe that you’re now essentially on target, and there’s generally little gap to be connected – assuming you don’t delay.
3. Don’t think only about Life Insurance – think beyond it
In India, the common methodology of Retirement Planning is to purchase LIC plans –, for example, annuities. This can be halfway ascribed to our overall prejudice towards risk and mostly to a still-low degree of in general mindfulness about other high-growth investment options. Traditional endowment plans are generally very poor retirement planning tools, as they are basically unequipped for delivering more than fixed pay returns, which are probably not going to beat inflation. In fact, most of the ULIPs that can offer robust long-term returns by outfitting the strength of equity markets are damaged by the charges and inbuilt costs that could work to your drawback. With regards to your retirement objective, don’t let your risk resilience level decide your decision of the investment option. Stay as aggressive as possible until the last 5 years, paving the way to your retirement, at which stage you could consider efficiently de-taking a chance with your portfolio from equities. However, be ready for certain knocks along the way, knowing completely well that equity markets will undoubtedly beat other asset classes over the long haul. All one needs to do is manage the risk related to equities and asset rebalance process in a disciplined way to bring out the profit automatically.
Therefore, with these 3 options, one can significantly boost their retirement corpus. However, the overall fact remains that retirement planning is one of the most important things to do in one’s lifetime. Retirement planning is as important as planning for the present, education, or even marriage. So, it will be better to think about various options for retirement planning efficiently. To know more about how to do retirement planning effectively, one can visit iiflinsurance.com, speak to their experts, and secure their future to lead a hassle-free and comfortable lifestyle without depending on others.
