TOP 7 IMPORTANT RETIREMENT PLANNING STEPS

Retirement planning is one time process but sticking to the plan is a challenge most of us find difficult to take. One should also review and assess the performance of the actions taken versus the plan. At times take corrective actions if required.

These steps are broad guidelines and final outcome is action plan for creating an income generating assets.

First Step: Is To Start Early: Start at the age of 25 and your commitment on monthly basis can be as low as ₹1600 per month . You start at the age of 45 and you may have to shell out ₹20,000 pm to reach same corpus at the age of 60 years. If you start early, you get the benefit of compounding, since you have longer time to invest .

Second Step: Assess Financial Commitment: Assess your financial commitments till retirement, till the age of 60 you will have many financial milestones which you must cross, you may have child’s education cost coming up. Do you have loan repayment coming and in how many years from now, do you have child’s marriage which may need some corpus. You may have commitment towards your parents etc. which may need some corpus. So plan for these items such that they do not eat into your retirement corpus that you are building.

Third Step: Retired Life Duration: Difficult one, how long will be your retired life from the day you retire from job to the day you retire from life, 25 years or 30 years or more. It is like asking how long one will live after retirement. We cannot answer this, however, one indication is look at your own family history if your grandfather lived up to 100 years you better plan for 40 years of retired life.

Fourth Step: Retirement Monthly Expense: Estimate retirement corpus that you will need at the age of 60 years and include inflation. First look at your cost of living today then multiply by 3 or 4 and that is your expected monthly expense at the age of 60. So if your cost is ₹25000 per month excluding all the liabilities then you can safely assume that you need at least ₹1lac per month to maintain same standard of living.

Fifth Step: Retirement Corpus Estimation: After estimating the monthly expense, you need to do backward calculation to estimate the corpus that should get accumulated which will give you interest income. We being a developing nation, we can safely assume that the FD rates 20 years down the line will not be 7% but more like 3-4 %. If you do backward calculation, then you would need around ₹4cr corpus which will pay you ₹1 lac per month.

Sixth Step: Mix of Assets in Portfolio: Invest in mix of asset classes and aim for your investment corpus rather than running after schemes which doubles your money. You should build balanced portfolio, should have Mutual Funds, Debt, Equities, FD’s and also real estate. A good blend and mix which would give you required wealth for retirement.

Seventh Step: Be regular in investment: Invest regularly and review your portfolio regularly. Every time there is a salary hike put 10% of the hike into SIP. If you get good bonus set aside small portion for your retirement corpus. Remember even if SIP is a powerful tool you should do regular review of the portfolio, recommended time for review is 3-6 months .

Once you have followed these steps the challenging part is to stick to the plan and stick to it for long period till you retire. This is possible to achieve with active participation and with the support of good advisor.

#RetirementSteps #FinancialPlanning #WealthBuilding #RetirementGoals #SmartInvesting #FuturePlanning #RetirementSavings #SecureFuture #FinancialFreedom #RetirementPreparation