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Retirement Plan: Are You Doing It Right?

Written by Samir Jhaveri | Jan 7, 2022 2:29:56 PM
  • If you already have a retirement plan, Congratulations! You're ahead of a sizable portion of India.

    In fact, according to various sources, nearly half of families have zero savings for retirement.

    A straightforward concept of a retirement plan is the one you do to be financially ready for the period of your life when you are done working. This plan also includes non-financial aspects such as:
    - where to live,
    - when to stop working at all, and
    - what you will spend your time on.
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  • When Can I Plan My Retirement?


  • It doesn't matter how old you are. You can never be too young or too old, to begin with, a retirement plan. This guide your actions to prepare for your retirement based on your age.
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    • Young Working Life (21-35)

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    If you are starting a professional life, you may not have a lot of savings you can invest. However, the bright side is that you have a lot of time to make your investments grow, thanks to compound interest. This investment feature allows you to earn interest over your claim, making your investment capital larger each time.


    Say you start saving just INR 5000 each month due to the wonder of compound interest. It will have tripled its value if you invest it at 25 rather than start investing at 45.
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  • Early Middle Age (36-50)

 

  • This is a critical point of life in which you need to give special attention to your retirement savings.

    In this stage, you may start having some financial stress due to credit card debt, mortgages, loans, and so on.

    Despite these hurdles, the higher income you will be earning, and the time you still have to make your investments grow to make this phase, the best years to get some significant savings.

     

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  • Later Middle Age (51-65)

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  • Even if the time to earn good returns from compound interest may be running out, you can still use some advantages in your favour.

    By this point, you may be done paying all your loans at mortgages, which leaves you with more available income to invest.

    Also, you will be earning more excellent wages as you will start getting some of the benefits from Social Security which you can use in favour of your retirement savings.
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  • Are You Doing it Right?


  • The sooner, the better!
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  • Whether you just began saving for retirement or are only a few years from quitting work, you need to consider some aspects of retirement planning.

    Saving for retirement should be top of your list. The rule of thumb is as soon as you start earning, start saving. Even if you think you'll retire in 40 years, keeping for old age should be just as important as paying your bills.
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  • We all make excuses.

    'Just as soon as I've paid off my debts' or 'after I've travelled the world,' or 'when I get a pay rise.' The reality is, whether you fall under millennial or baby boomer, now is the time to start putting money aside for your retirement.
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  • Takeaway

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  • If you're young and you can't save much right now, don't be discouraged. Your earnings are likely to go up as you move up the career ladder, allowing you to save more each year.

    Remember, when you plan your budget (what you'll need to live comfortably), make sure your yearly contributions meet your savings target. Then, if you're struggling to cover your expenses and meet your saving goals, get rid of wasteful habits.

    That might mean swapping your daily INR 40 for a coffee cup can help you start your investment plans.
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