Building your dream retirement: Understanding the power of a healthy retirement corpus

Retirement can be a tricky phase of life for more reasons than one. As you bid goodbye to the hustle and bustle of a busy professional career, you also recognize the fact that you won’t draw a regular salary. But just because you stop earning, it doesn’t mean that you must stop leading a comfortable and secure life.
So, how can you ensure that your retirement years turn out to be the ‘golden period’ of your life? Simple – by understanding the power of a robust retirement corpus.

In this article, we will take you through the significance of having a substantial retirement fund and how you can build a corpus that empowers you to embrace the second innings of your life.

What is retirement?

Retirement gives you the freedom to pursue your passions, spend quality time with loved ones, embark on new adventures, and relish the fruits of your labour. Though the retirement age in India is between 58 - 60 years in the private sector and 60 years for government employees, many are considering raising it to 65 years.
Unfortunately, in a life full of uncertainties, planning for retirement seems like the last priority for many. In fact, according to a survey, over 85% of people above the age of 50 years regretted that they hadn’t started investing for their retirement sooner. That said, there are also people who plan for retirement early in their careers and reap the benefits of the decision later.

At the heart of a successful retirement lies a robust retirement corpus, a financial reservoir designed to sustain you through thick and thin when you are no longer drawing a salary. A retirement corpus is a nest egg built over the course of your working life through savings, investments, and pension contributions. It is a potent instrument that provides you with financial security, independence, and the means to enjoy the lifestyle you desire during retirement.

Significance of a robust retirement corpus

By accumulating retirement fund through the years, you can shape your dream retirement and get several key benefits:

• Financial security: The right retirement plan can ensure that you have a steady stream of income even after you stop working. It acts as a safety net, protecting you from unforeseen circumstances, rising healthcare costs, and economic fluctuations. With a secure financial foundation, you can confidently navigate the complexities of retirement without worrying about your financial well-being.
• Freedom of choice: With a healthy retirement corpus, you can make choices that align with your aspirations and values. Whether it is travelling the world, starting a new business venture, or supporting charitable causes, having a substantial retirement fund enables you to pursue your passions and positively impact the world around you.
• Maintaining a desired lifestyle: Retirement is a time to sit back and indulge in the lifestyle you've dreamt about all these years. A good retirement plan will help you maintain your desired standard of living, affording you the luxuries and comforts you've worked hard to achieve. Whether it's living in your dream home, engaging in hobbies, or spoiling your grandchildren, a sizable retirement fund enables you to enjoy life to the fullest.

Building your dream retirement corpus

Now that we understand the significance of a robust retirement corpus, let's explore how you can build it:

• Start early: Time is your greatest ally when it comes to building a retirement corpus. The earlier you begin saving and investing, the longer your money has to grow through the power of compounding. Even small contributions made consistently over an extended period can result in substantial gains.
• Set clear goals: Define your retirement goals by considering factors such as the lifestyle you desire, anticipated expenses, and any specific aspirations you wish to fulfil. This clarity will help you determine the amount you need to save and invest to achieve your retirement objectives.
• Diversified investment strategy: A well-diversified investment portfolio can help you maximise returns while managing risk. Consider a mix of asset classes such as stocks, bonds, mutual funds, and real estate, aligning them with your risk tolerance and long-term goals.
• Regularly monitor and adjust: Periodically review your retirement plan and adjust as needed. Stay informed about market trends, reassess your risk tolerance, and adapt your investment strategy accordingly. Remember, flexibility and diligence are key to ensure that your retirement corpus remains on track. You can seek the help of a financial advisor to monitor and adjust your investment portfolio.

Retirement should be graceful. If you have lived your life with your head held high, you wouldn’t want to depend on someone in your later years. In this regard, thorough retirement planning can be your most trusted companion. But, to achieve that you must start drawing a retirement strategy as soon as you can. Start early, set clear goals, embrace a diversified investment strategy, and contribute to retirement accounts regularly. This will enable you to accumulate a retirement fund that allows you to live your dream life even after you are no longer employed.

FAQs:

What are the factors to consider when planning for retirement?

You must determine your retirement goals, estimated expenses, and desired lifestyle. Analyze your current savings, investments, and potential sources of income during retirement, e.g., pension. Do not forget to factor in inflation and healthcare costs when planning for retirement.

How much should I save for retirement?

The amount you should save will depend on numerous factors, such as your desired retirement lifestyle, expected expenses, and time horizon. It is suggested to save at least 10-15% of your income for retirement. Additionally, using a retirement calculator in India can help you get a clear understanding of how much you should aim to save.

When is the right time to start retirement planning?

The earlier you start planning for retirement, the better it will be in the long run. It is recommended to start retirement planning as soon as you begin earning a steady income, ideally in your 20s or early 30s, to benefit from the power of compounding.

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.