Best Tips and Practices for Retirement Planning

Many people are not familiar with the concept of retirement planning. Retirement isn't just about relaxing in an armchair sipping morning tea; it's about much more. A wise and secure investment plan is necessary for a comfortable life after retirement.

No matter whether you're still working or have already retired, knowing where you're going is always a good idea, and it's never too early to start planning for your retirement. While some people believe it is too early to consider retirement planning, others believe there are more challenging issues that must be addressed. Unfortunately, making excuses will easily turn it into a bad habit, causing problems in your post-retirement life. With average lifespan rising and medical care costs rising, it's more important than ever before to start planning for retirement.

Setting the right goals, investing, sketching out a vision, planning early, and working toward achieving them is all part of the retirement planning process. To summarize, it's all about putting money aside for a secure future before reaching retirement age.

Best tips for retirement planning:

1- Plan at an Early Age

Ideally, A person should start investing in retirement plans as soon as they receive their first paycheck. The earlier a person begins saving for retirement, the greater the gains because the money invested has more time to compound.

If a person must start investing Rs 4,424 per month, assuming the 10% return at the age of 30, if he wants to save Rs 1 crore by the age of 60. but if he begins to invest at the age of 50, he will need to invest Rs 48,817 per month. An individual must either increase his NPS contribution or invest in other retirement products to bridge the gap between his NPS contribution and his retirement amount.

2- Long Term Commitments

Sometimes Individuals make a huge mistake by withdrawing their money from long-term retirement products like NPS, EPF, and PPF, and this has an impact on their retirement goals. A person should only use these options and withdraw their money in an emergency. Therefore, the corpus would expand as a result of this long-term commitment habit. If an employee changes jobs, he or she should transfer his or her EPF account to the new employer rather than withdrawing the funds because this instrument is risk-free, tax-free, and pays a high rate of interest.

3- Investment Discipline

Despite starting early, many people do not invest enough money to build a retirement fund. The main reason is excessive spending at a young age. Rather, one should begin investing in retirement instruments with small amounts and gradually increase their investments as their income rises.

4- Enhanced Life Expectancy

Most people only plan to retire when they are 75 years old. We need to plan for up to 85 years of age as life expectancy continues to rise. It is critical to have a good health insurance plan that covers you until you reach this advanced age. For a steady income, a person should invest in the Senior Citizens' Savings Scheme, PM Vaya Vandana Yojana, continuing PPF, RBI bonds, mutual funds (SWP), and senior citizen FDs even after retirement.

5- Keep Inflation in Mind

When it comes to retirement investing, use a combination of equity and debt. When inflation is factored in, the corpus you assume is sufficient under current market conditions may not be enough. In a long-term investment, even a 1% increase in return can make a significant difference. Individuals who only invest in safe debt assets for the long term would have a very small final corpus.

6- Contingency Corpus

Instead of putting money in your bank's savings account, invest in liquid mutual fund schemes or bank FDs, where the returns can be significantly better.

As a result, a person should make financially good decisions by making smart investments at a young age and that will yield a sufficient corpus to be used exclusively for retirement.