Retirement Planning

“Retirement is wonderful if you have two essentials — much to live on and much to live for.” 

Retirement is the freedom to pursue any goal as long as one’s physical and mental capabilities last. It is that point in life when you have the financial ability to follow what you want to do in life.

 But having financial constraints at that age will make you dependent on others. That’s why planning for retirement is one of the crucial things one must do. Because the question isn’t at what age you want to retire; it’s at what income so that you can live a financially independent retired life.

Why do you need to plan for your retirement?

Rising Life expectancy – It has increased from 32 years in 1947 to 70.19 years in 2022

Inflation & Medical inflation – The Consumer Price Index has averaged over 7% p.a., and India has the highest medical inflation rate of 14%.

People opt for “early retirement” in search of meaning for overall well-being and happiness.

We usually ask our clients: “When do you want to retire?” Many of them want to retire early from their commitments. What they essentially mean is becoming financially independent. 

Why should you start planning for your retirement now/early?

Tax benefit: many retirement investment options help you to save taxes. Retirement plan investments allow you to benefit from several tax advantages that you might not be able to utilize if you wait until your retirement is nearer.

Good returns on investment: Keeping money in Fixed Deposit for the long term will not help you to accumulate corpus, beating inflation. The key to earning higher returns is choosing the right investment opportunity. Starting early will enable you to give equity exposure to your money. As the ages go by, the risk appetite will decrease.

Having time to concentrate on other financial goals: Investing early for retirement reduces your financial burden more than staring at your 40s or 50s. You can work on other financial goals, such as a child’s education, marriage, or on your interests, without impacting your living standards.

An example as a case –

There is no one who does not worry about what will happen after you stop earning but have to keep spending.

Let’s consider a scenario say you are 35, and if you need Rs 50,000 a month for your expenses today, you will need almost Rs 1 lakh a month after 10-12 years and 1.93 lakhs after 20. And imagine the corpus you need to arrange for if you are destined to live till 80. There precisely arises the need for retirement planning.

So, what’s the right age to start saving for retirement? A Chinese proverb says- “The best time to plant a tree was 20 years ago. The second best time is now”.

Retirement is not an age to reach but a decision to make.  So the wise thing is to start planning early and start investing early.  Because what you do today for your betterment will determine what kind of life you leave post-retirement.

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