Retirement planning requires patience and effort. It may seem like an overwhelming task now, but what you do today can help you achieve the sweetest retirement fruit. A sufficient retirement corpus will allow you to maintain the lifestyle you want in your later years. In these times of inflation, you cannot just rely upon your savings. For growing your wealth, you need to start investing in retirement funds from an early age. The money you begin to invest at a young age matters more because it has more time to grow until your retirement.
You can make things simple for yourself by directing your money towards investments. If you don’t have the money in hand, you won’t be tempted to spend it.
Steps To Prepare For a Stress-Free Retirement
Here are some steps you must take for a financially stable retirement:
- Live below your means
Lowering your monthly expenses can help you prepare for your retirement. Cutting down unnecessary costs will help you save and build a corpus in time. A monthly budget is a crucial step to your retirement success. Living below your means allows you to increase your savings so that you can invest it in a retirement plan for the future. Figure out how much and where you spend a month in committed expenses, like housing, utilities, and food, versus your lifestyle expenses, like entertainment and food, which can be cut down to a minimum.
- Reduce and avoid debt
It is essential to enter your retirement debt-free. Improving your financial well-being by clearing off all your debts (if any) ensures a carefree retirement.
- Prioritize Yourself
Many people focus all their funds on their children’s higher education or marriage and forget to save for retirement. Distribute your funds wisely and do not compromise your future.
- Protect yourself and your loved ones
Make sure you have the right life insurance coverage to protect you and your loved ones against any potential risk. Nobody has seen the future; therefore, it is crucial to have a life as well as health insurance to take care of any medical emergencies that arise. An appropriate coverage can reduce the financial risk associated with these obstacles and should be a part of your retirement planning review.
Investment Options For Retirement
An ideal retirement means regular flow of income without going to work every day, which you can achieve only when you plan your investments well during your working days for the golden years later on. Thus, it is crucial to choose your plans wisely and carefully. Here are some investment options to choose from:
- Public Provident Fund (PPF)
PPF is an efficient retirement planning scheme that also allows you to save tax under Section 80C. You can start investing in PPF with a minimum amount of Rs. 500 and a maximum of Rs 1.5 lakh each year. The rate of return on PPF depends on the average bond yield in the previous year, which can cause fluctuations in the profits. You can open a PPF account at your nearest post office or leading banks, and through online modes too.
- Mutual Funds
The most significant advantage of mutual funds is that you can invest in the market without having to do extensive research on what to buy, hold, or sell. A fund manager takes care of your fund portfolio to provide the best returns. The ideal way to invest in mutual funds is through a Systematic Investment Plan (SIP), which helps you spend with a disciplined approach whether the markets are rising or falling. In a falling market, SIP investment allows you to buy funds at lower costs, while in a rising market, you gain increased returns. A SIP will enable you to beat inflation and create long term wealth. Moreover, mutual funds SIP’s helps you practice continuous compounding for wealth creation.
Before making an investment decision, it is best to run through an expert financial consultant. Reputable financial advisors like Finedge provide useful advice on plans that suit your needs the most.
Unit Linked Insurance Plans (ULIPs) offer a dual benefit of insurance as well as investment. When you invest in ULIPs, a part of the premium goes for your investment needs, and the rest goes as per your scheme, which could be equity-oriented or debt-oriented. Due to the high risks and rewards, ULIPs can make a useful tool for retirement fund creation.
The golden years of your retirement age can be best lived when you have enough money to follow your dreams and enjoy to the fullest. The right investment decisions made at right time in life ensures that you won’t face any financial constraint in your retired life.