Plan your Retirement

Posted on Posted in Advice

A retirement planning is assessing your retirement at a right age with the right amount of fund to live a lifestyle you desired. But not all makes these plans.

A survey conducted in 2015 amongst 15,000 respondents across 15 countries out of which 1000 Indians participated. 900 of those Indians were working and 100 were retired. 6.98 out of 10 had a perfect retirement plan and others were not satisfied with their track of retirement planning. 44% people are confident that they will retire with utmost leisure in the way they desired compared to the 22% across all the countries that were surveyed. On an average, employees in India can achieve only 71% of their desired retirement income. This pattern is due to incoherent saving assuetude.

A case study determines the precedence of retirement plans of A, 53 and B, 58. A planned for his retirement in his days of yore and had adequate assets to fund his retirement, whereas, B has spent all his funds in celebrating the wedding of his children lavishly.

Currently, he is left with 10 lakh, which he invested in fixed deposit and might get Rs. 75,000 per month. Most of the Indian employees use employer-worker plan, where 31% stock up their employer contribution to retirement program provided by their workplace. Other than that, there is a high intake of savings account and life insurance for retirement. 61% of the employees use the savings account to prepare for their retirement.

If you want to savor your life after retirement, start investing early. A started investing for his retirement since first got his job. He started a Public Provident Fund (PPF) made sure to invest 10% of the salary for his retirement every month. Provident Funds are primarily for retirement.

Let’s foresee a situation of 21-year-old whose basic salary is Rs. 10,000.Let’s assume that he plans to draw back from his job at the age of 58. If there is 5% annual increase in his income, his total corpus at the time of retirement will be 1.42 cr.

Planning for your retirement age in advance is also beneficial. Have clear goals about your retirement and apportion your funds for various goals accordingly. Calculate your retirement corpus according to your plan. Decide what will be your per diem at the time retirement.

To calculate your expenses, take your present expenses as base, rebate children’s education fund and other fiscal capabilities. Calculate the future financial overheads at the estimated inflation rate.

Suppose, your monthly expenses at the age of 35 is Rs. 25,000 and the present inflation rate is 8%, so your calculated future expense at the time of your retirement will be Rs. 1,47,000. Now, let’s assume that your life expectancy is 80 years and with 9% returns on your retirement nut and 7% inflation rate in future, you will need 3.17 cr. to survive. Start investing in equities. Slowly and gradually build a portfolio with large companies added to it. Classify Sensex companies and keep investing a minimal amount in it every month irrespective of the market situation in vogue.

Once you have planned the source of your retirement funds and defined other goals, plan activities post retirement. It is very difficult to survive when you suddenly stop working. Loneliness and forlornness will haunt you. Develop the hobbies that you did not have the chance to do. Plot exercises like teaching, part-time consultancy or part time jobs. This will not only keep you active physically and mentally but also gain you some cash.

Hence, plan your investments and funds in such a way that you live securely and with leisure during retirement.