Are you dreaming about the relaxing times that you will spend during retirement? You are not alone. Managing present expenses and income, investing and saving, all at the same time, goes toward retirement planning.
But why do we need retirement planning?
Retirement planning is all about planning for the future while living and managing things in the present. Life is uncertain and can come at you all of a sudden. With the right spirit and mindset, you can effectively plan for retirement and make the most of it.
Retirement planning takes consistent efforts and sound planning. Before you plan for retirement, you need to be aware of the six basic things that can help you make better decisions:
- Start Early: Now, you may have heard someone or the other say this to you; however, in simple words, starting early lets you benefit from time’s compounding effect. It allows you to compound your investments over months and years. In case things do not go as per your plan, starting early gives you a chance to adopt a course of correction.
- Retirement planning begins with determining corpus: Investing without a plan can be a false way to go. The same goes for your retirement plans. An ideal corpus can be an amount that is 40 times your annual expenses.
- Diversifying investments for your betterment: Investing in just one particular asset is not wise. As far as retirement planning goes, investing in multiple assets can be beneficial. Investing in the National Pension Scheme, a mix of debt and equity, can help you leverage risk better.
- Splitting retirement money: During retirement, you can receive money in two ways. While doing your retirement planning, you can set some amount to be received in a lump sum manner, and the rest can be obtained regularly. This allows you to have a passive income even during your retirement period.
- Debt-free before retirement: Clear all your debts before you retire. This is a critical part that you should account for while doing your retirement planning. This allows you to be free from stress during your retirement as well as keeps debt away from your next of kin in case of your unfortunate demise.
- Stay insured post-retirement as well: Medical insurance and life insurance are both critical across all stages of life. Health expenses have risen over the years and are only getting higher. However, your best hedge against illnesses and poor health is getting insured. Retirement planning is complete with insurance.
Apart from this, a few key points to know before you do your retirement planning are:
- Stay fit and maintain an active lifestyle
- Indulge in engaging hobbies and activities
- Explore the world as much as you can
- Spend time with your loved ones
- Lazing away at home isn’t fun
As you look ahead to the golden years of retirement, remember that the power to shape this phase of life is in your hands today. Retirement planning is more than a financial strategy; it’s a commitment to your future self.
