5 golden rules of retirement planning

You can try 5 golden rules of retirement planning at any age. If you are lucky, you can start your retirement even earlier. The progress being made in the field of medicine and the improvement in our standard of living are increasing our hopes of surviving more days.

According to a survey, between 2031 and 20141 it is expected to increase only by 0.5% due to falling fertility rate and increasing life expectancy in India. Life expectancy will continue to increase in both men and women. Therefore, if we look at the experiences of other countries, then the age of retirement (retirement from working) is also set to increase in the case of both men and women. For a long time, people preferred to work till the age of 55 to 60 years and after that they would retire. However, changes are being seen on a wider scale than before. People are trying to work for the next 15 years after passing the age of 60. Since the age of rest from work is bound to increase, it is better to recognize the signs of these changes ahead of time. Probably only a decade before that, the workforce can be prepared in advance for this.

We will discuss here the 5 golden rules of planning for retirement. You can try them at any age, if you are lucky, you can plan your retirement in advance:

Start saving early and do it often
The first rule of retirement planning is quite easy. First, you have to save 10 to 15 percent of your total income every year so that after retirement you will have enough money to spend your life. Secondly, it is good that you start saving in your 30s. However, it is better to start before that to pass stress-free old age. By planning well in advance about your retirement, you will accumulate a large fund, after which you will have a means of regular income after retirement. You will also get benefits along with insurance cover by choosing a pension plan with the features needed.

Here the new round of ULIPs can help you, understand how they work:
Suppose at the age of 30 you start saving Rs 10,000 annually for the next 30 years. If 8 percent interest is received, then your money will reach a total of Rs 1.5 crore. If your friend accumulates twenty thousand rupees every year at the age of 45, then after a period of 15 years his fund will be only 70 lakhs. Even your friend had deposited double the money from you because you started saving this soon. You can have more than double the money at the time of retirement. Thanks to compound interest for this. Just a little money saved due to compound interest can become a huge amount after retirement. But for maximum benefit, this savings should be started as soon as possible.

Plan your needs after retirement
According to experts, after retirement, a total of 70 percent of your savings will go towards your daily living expenses, till then the salary or income you get will also be gone. The only way to avoid this problem is to plan well in advance. After a proper review of your financial circumstances, you will be able to identify your big and big financial goals. Make a list of your needs and goals. Keep in mind that the arrangements for the expenses of your daily life should come first. The biggest thing is to set real goals and priorities. You should know how much money will be required to fulfill your wishes after retirement. Whether you are planning a trip to the whole world or are in the mood to spend your whole life with your family, you should have a clear idea about what to do after retirement.

Inflation Keep in mind also
Inflation will eat the real value of your savings. In simple words, your money will not be able to buy the next year as it could this year. With the passing time, you will not be able to buy as much money with the same amount of money as you can buy now. The inflation factor has to be kept in mind while making investments for retirement. Inflation will continue in the years after your retirement, think about it.

Plan for healthcare expenses as well
After retirement, when you plan a big fund, remember that with the increasing age, healthcare expenses also increase. Health problems are set to increase with old age, and medical bills can eat up all your savings. So when you plan for retirement, health insurance plays a big role. Depending on the coverage and facilities available, any good health insurance plan can be chosen according to your needs, there are all kinds of options available in the market. Money and good health are both necessary to live a comfortable post retirement life. Make sure that you have a way to pay bills in medical emergencies, through insurance or through some other fund.

Do not touch your retirement fund before retiring
People usually have a habit of withdrawing money from their retirement fund during the time of children’s marriage, buying a home, or any medical emergency. When money is taken out of it, it reduces the power of compounding. If the pension account is not touched, then the common man earning 25000 rupees can collect 1.65 crores after 35 years. Therefore, it is advised that you never touch your retirement savings, because if you withdraw money now you will lose both your principal and interest.

(The writer is the Chief Business Officer of Life Insurance, policybazaar.com. These are his personal views)

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