Secure your future: Everything you must know about retirement planning.

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What is retirement planning?

Retirement planning is the process of preparing for life after retirement in different aspects, but especially your finances, so that you have a financial cushion even after you stop working.
The non-financial aspects of retirement – such as what to do, where to live, etc. – may not necessarily need too much preparation in advance. However, you must get your finances in order as early as possible to maintain the lifestyle you want 10, 20, 30, or even 40 years after you stop working actively.

Importance of retirement planning:

Retirement planning is crucial even if you want to continue working full-time, part-time or on a contract basis post your retirement age. Here are 3 reasons that tell you the importance of retirement planning:

  • Social security: Once you hit the retirement age, your social security may take a blow if you haven’t planned for your financial security in advance. Furthermore, if you don’t have a pension to rely on, meeting your expenses can be even more difficult. Thus, retirement planning becomes crucial to ensure social security in later years.
  • Medical needs: Irrespective of how well you take care of your body and mind, ageing is a non-negotiable part of life. Therefore, medical emergencies need to be accounted for in your retirement plan. The steep rise in healthcare costs will not give you sleepless nights if you plan your retirement well.
  • Rise in Self-Employment: Nowadays, many young adults are opting for the self-employment route, which makes it crucial for them to start planning for retirement. They can live life on their terms, even in their golden years, without having to depend on their children if they have a robust retirement corpus.

When should you start with retirement planning?

The power of compounding works beautifully over the long term. So, you should start with retirement planning as soon as possible. Experts suggest starting as early as your 20s. Also, always have the goal of building a retirement corpus instead of losing sight of the big picture and spending all your earnings on whatever social media tells you to do. Even if you are in your 30s, 40s or 50s, you can still get started with a more vigorous investing plan.

How to plan your retirement?

Set a target: Picture the lifestyle you want to maintain in your golden years and estimate your monthly expenses for it. Factor in inflation and arrive at the total amount you want to have in your retirement corpus on the day you retire.

Commit to the goal: Make a commitment to save and invest a certain amount of money each month towards your retirement goal. Set up standing instructions or a separate account where you put aside money for your retirement. Never dip into these savings and investments unless necessary.

Pay off all debt: You cannot have a recurring monthly expense burdening you in your retirement years. Thus, pay off all debts, including education loans, mortgages, car loans, etc., before you retire.

Carry out routine check-ups: Take the time, at least twice a year, to check your progress towards your retirement planning goals. Readjust your saving and investment strategy if required. For instance, younger people can consider investing more in equity since they may have better risk-appetite, but people nearing retirement should focus more on low-risk investments, such as government bonds and so on.

Retirement planning is for everyone who wants to live a carefree and independent life post-retirement. It helps you become responsible for your own well-being instead of relying on your children for retirement support. The key is to get started as young as possible so that you have the leeway to try different investment strategies and tweak them to build a strong retirement corpus.


What are the basics of retirement planning?

  • Start young
  • Build a retirement portfolio
  • Pay off all debt before retirement
  • Build multiple streams of income such as fixed-income instruments, rental properties, etc.
  • Keep tweaking your investment strategies to stay on course with your retirement planning goals

At what age I should start retirement planning?

The best time to start is as soon as you start earning and learn what is retirement planning. Start in your 20s or as soon as you realise the importance of retirement planning.

Where to invest to plan retirement?

Do not put all your eggs in one basket. Invest money in mutual funds, fixed-income instruments, real estate, gold, and government-backed securities.

How to invest to plan your retirement?

If you have more than 20 working years before retirement, you can start planning your retirement with equity and equity-based investments to grow your corpus faster. Move to debt funds, bonds, and other low-risk investments as you move closer to retirement age.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.