Saving for Retirement: Points to Consider and Planning Tips

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Saving for retirement is one of the most critical financial goals you'll ever pursue.?

Here we will explore each point with an example of Bestii Singh, a 35-year-old professional who earns ?10,00,000 annually. He wants to retire at 60 and maintain his current lifestyle during retirement.

Let's jump to the topic & explore some important points :??

1. Know Your Retirement Number?

???Understanding how much you'll need to maintain your lifestyle in retirement is crucial. Consider factors like inflation, healthcare costs, life expectancy, and desired lifestyle.??

Bestii wants to estimate how much he’ll need to retire comfortably. Assuming he needs ?50,000 per month (?6,00,000 annually) in today’s terms and expects to live till 85.? Accounting for inflation at 6% and a post-retirement investment return of 5%, his retirement corpus goal is approximately ?3.5 crore.??

This calculation gives him a target and ensures he saves enough without running out of money during retirement.??

2. Start Early??

???The earlier you start saving, the more time your investments have to grow through the power of compounding. Even small contributions can lead to significant growth over time.??

If Bestii starts investing ?20,000 per month at 35, assuming a 10% annual return, he will accumulate ?3.8 crore by age 60. However, if he delays starting by just 5 years, he’ll need to invest ?30,000 per month to achieve the same goal.??

The earlier you start, the less burden you’ll face later.??

3. Diversify Investments??

???Use a mix of investment options such as mutual funds, stocks, and small Saving schemes, to balance risk and return.??

For instance, Bestii decides to spread his investments across:??

Mutual Funds For long-term equity growth, Fixed Deposits/Bonds for stability, National Pension System (NPS) for tax benefits and retirement focus.??

This diversification reduces risk while maintaining healthy returns.??

4. Maximize Employer Contributions??

???If your employer offers a retirement plan with matching contributions, take full advantage of it. It's essentially free money toward your future.??

Bestii’s employer provides a matching contribution to his EPF (Employee Provident Fund). he ensures she contributes the maximum eligible amount to get the full benefit. For instance, if his employer matches ?2,000 monthly, that’s an extra ?24,000 annually added to his retirement fund.??

5. Account for Healthcare Costs??

???Medical expenses can become a significant part of your budget in retirement. Consider options like Health Savings Accounts (HSAs) to offset future costs.??

Bestii anticipates higher healthcare costs as he ages. He starts contributing to a separate health-focused investment. For instance, he targets building a ?25 lakh healthcare corpus by retirement.??

6. Review and Adjust Regularly??

???Periodically revisit your retirement plan to ensure you’re on track. Adjust your contributions and investment strategy as your goals or circumstances change.??

Every year, Bestii sits with his financial planner to review his portfolio. For example, if his equity mutual funds have underperformed, he reallocates a portion to a better-performing fund. Regular reviews help him stay on track with his goals.??

Need more details: https://bestinvestindia.com/retirement-planning-steps/

Why Work with a Financial Planner???

A Certified Financial Planner can guide you through these complex decisions, ensuring you have a tailored strategy for your unique needs. We can help you estimate your retirement number, choose the right investments, and create a roadmap to achieve your goals.??

Ready to Secure Your Future???

Contact us today to create a customised retirement plan that works for you. Your future self will thank you.?https://wa.me/918178594989