Fin Quest

Retirement Planning:

Retirement planning is the process of determining retirement income goals, actions and decisions necessary to achieve those goals. It includes identifying sources of income, sizing up expenses implementing a savings program, and managing assets & risk.

Why Retirement Planning is essential?

Retirement planning helps to determine how much to save today for retirement; how to invest the savings to get the desired returns; how to protect the assets and provide for in case of unfortunate events and how to make judicious use of retirement income post retirement.

The following are the reasons why retirement planning is essential:

Cannot work forever.

The average life expectancy is increasing.

Higher complications, e.g., medical emergencies.

Best time to fulfil life aspirations.

Relying on one source of income is risky, e.g., pension.

Do not depend on children.

Contribute to the family even during retirement.

Therefore, to lead a peaceful and uncompromised life during retirement, it is essential to start planning and investing towards it.

Ways to plan for Retirement:

Determine the investment horizon

Estimate the expenses

Have a contingency fund for retirement

Decide on the asset mix

Start investing early

Avoid using the funds kept aside for retirement

Thumb rule for Retirement Planning:

10/30/60 Thumb rule:

This is the typical breakdown of where retirement income comes from:

10% comes from money saved while working.

30% comes from investment returns on the savings before retiring.

60% comes from investment returns after retirement.

The actual investment returns over lifetime will depend on the appetite for risk and the mix of assets investing.

Best retirement planning tips to consider for an individual:

Monitor your investments in pre-retirement.

Plan keeping in mind the effects of inflation.

Talk with your spouse about retirement spending.

Focus on physical health and get appropriate Health Cover.

Create a budget and follow it.

Get a good investment professional if help is required.

Pay off your mortgage.

Fin Quest

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