Tips on Saving for the Golden Years of your Life
As you will grow older, your professional life will come to an end. But do you really look forward to your retirement? Or the thought of your retirement only triggers your worries and depression? How you look at your retirement depends on whether or not you are saving enough for your post-retirement life.
Retirement is inevitable after several years of your professional life. But how you will lead your life post retirement depends a lot on your hands. Hence, a financial planning to take care of your post-retirement expenses is necessary.
Retirement planning is not just writing down the money you want to save every month. It is a lot more than that. When you plan for your retirement, you should ensure that your family never feels the absence of a regular source of income, or they are not compelled to be frugal just because you have retired. Here are few tips that will help you make a sound retirement planning.
Use a pension calculator
The first and foremost step in your retirement planning is to find a good pension calculator. A pension calculator helps you estimate the amount of money you need to have at the time of your retirement. The best parts of a pension calculator are that, it is free and easy to use, it provides instant and accurate calculations. A pension calculator is easily found online. You have to put in some simple pieces of information like your Date of Birth, retirement age, current saving, annual income etc and as output, it will provide the calculated amount of money you need to have at the time of your retirement. It will also help you estimate how much money you need to save or invest monthly in order to reach the required amount by your retirement.
Invest in a Pension plan
A pension plan is a type of insurance plan that helps maintain a stable income flow after your retirement. There are different types of retirement plans available in the market. An immediate annuity plan allows you to pay only for once and start receiving money immediately after your retirement. In case of a deferred annuity plan, you pay your regular premiums for a limited period of years and start receiving money as soon as the policy matures. If you want to create wealth and your risk appetite is high, you can invest in market-linked pension plans so that at the time of maturity you will receive healthy returns based on market performances.
Start as early as possible
Most people realize the importance of a pension plan when they are on the verge of their retirement or after they have already retired. If the realization comes after retirement, you are already into a huge financial trouble. But if you are still working, you still have time before your retirement. Buy an immediate annuity plan as soon as possible. Besides, the more you delay the more money you will have to save every month. If you do not start saving early, you will end up making riskier investment decisions later in life. So, start saving and buy a retirement plan while you are still young.
Never forget Inflation
Never forget to take Inflation into account while planning for retirement. Inflation is the general increase in prices and the decrease in the purchasing value of money. In other words, things will get costlier with time. The money you need to purchase a car today, after 30 years with the same amount of money you will be able to buy nothing more than a simple piece of furniture for your house. So if you ignore inflation, you will end up not having enough money to maintain your standard of living post retirement. While doing your calculations, always use a realistic inflation rate. So it is best to use a retirement calculator to calculate the amount of money you need to save for your retirement.
Do not cash out from EPF Money
If you have an Employee Provident Fund, never unnecessarily withdraw money from there. EPF is tax-free and it provides financial security after retirement. So it will be a foolish idea to withdraw money from an EPF account before retirement. If you have already done so, start paying back as soon as possible through an SIP (systematic Investment Plan).
Buy a Health Insurance plan
As you age, the chances of your falling ill increase. Healthcare is so expensive these days that even a single hospitalization may wipe out your entire savings. So, to prevent such a situation, you should have a health insurance plan that saves a lot of your money by taking care of all your medical expenses. Not having a health insurance often lead to a terrible debt trap that is very difficult to get out of.
Consider buying a Term Insurance plan
When you are planning for retirement, pension plans and pension calculators get the utmost importance. Pension plans provide financial security in your post retirement life. But it is also necessary to have a term plan as it pays a lump sum assured to your nominee in case of your unexpected death.
It is said that after retirement, begins the golden years of an individual’s life. It is the time when you can try different new things. You can learn a new skill, you can learn a foreign language, you can join a hobby class, you can write a novel, you can go on a foreign trip, or you can just have a relaxed life spending time with your grandchildren. You can fulfill all your dreams that you have kept dormant for a long time in order to maintain the right balance between your work and family life. Finally, it is time to listen to your heart and do whatever you want to. Always remember the famous quote, “Do not simply retire from something, have something to retire to”.
Want to make your startup journey smooth? YS Education brings a comprehensive Funding Course, where you also get a chance to pitch your business plan to top investors. Click here to know more.