Why Retirement planning cannot be an afterthought

In today’s rapidly changing economic landscape, retirement planning has become indispensable. It involves the strategic allocation of funds towards building a financial cushion for the future.

The essence of retirement planning goes beyond mere financial security; it encompasses the vision of a life unburdened by financial constraints and marked by independence and divinity.

As you embark on this journey, the timing of your investment plays a pivotal role.

Starting early allows for the maximization of benefits through the owner of compounding, laying a solid foundation for a secure and fulfilling retirement.

Reasons:

The imperative of retirement planning stems from a multitude of factors, each emphasizing the need for foresight and prudence in financial matters.

Lack of social security

India is yet to implement a robust social security system with retirement benefits for its citizens. Pensions and employee funds exist but they might not be sufficient to cover your expenses.

Financial independence

Retirement doesn’t mean that you stop living your life and have no expenses. For centuries, older Indians have relied on their children for retirement support.

Lately, people have started living a more independent and nuclear life which often results in them not being able to support their parents financially.

Having invested in a retirement fund would ensure that you wouldn’t have to rely on anyone, your children, friends or the bank to fulfill your needs.

Difficulty in taking loans with no steady income

Absence of steady income post-retirement makes it difficult to take out loans for any need. After all, banks don’t provide any ‘Retirement loan’.

Inflationary stress

Increase in prices of goods and services due to inflationary pressures means that not only ?will it cost you more to buy 1 litre of milk but also deplete your reserved fund much faster than you had initially anticipated.

Medical emergency

Given the rising cost of healthcare and the potential of an unforeseen medical emergency, allocating money for a retirement fund is all the more paramount.

Maintenance of living standard

Having a dedicated fund allows you to preserve your lifestyle and meet ongoing expenses without compromising on quality of life.

Inefficiency of fixed assets

Fixed assets such as real estate or certain types of bonds may provide steady returns, however they often fail to beat the inflation rate. The rising cost of medical expenses exceeds general retail inflation rates making fixed assets return rate incompatible. Proper retirement planning is essential to not only beat the inflation rate but also to maintain the purchasing power of your money.

How to do it:

Start early

Beginning to save for retirement as early as possible is crucial, as it allows for more time for investments to grow and compound.

Plan

Developing a comprehensive retirement plan is essential to determine specific financial goals and the steps needed to achieve them. Factors such as desired retirement age, estimated expenses, income sources and investment strategies should be considered at this stage.

Annual raises in the assigned fund

Regularly increasing contributions to the retirement fund, especially with annual salary raises or bonuses can accelerate wealth accumulation. Consistently boosting contributions ensures that the fund stays aligned with evolving financial needs and goals.

Periodic reviews

Regularly reviewing the performance of the fund and reassessing investment strategies is crucial to make sure that it remains on track to meet retirement objectives. Adjustments may be required based on changing market conditions, personal circumstances, and retirement goals.

Avoid using the said fund

Maintaining discipline and only tapping into the fund when absolutely necessary helps preserve its integrity and warrants that it can adequately support retirement needs when the time comes.

Effective retirement planning in India demands a holistic approach that considers individual aspirations, risk tolerance, and prevailing market dynamics. With advancement in medical science leading to longer life expectancies, prioritising retirement savings has never been more critical.

Not only does it fortify your financial security but it also alleviates the potential burden on future generations. By proactively planning and diligently saving for retirement you can embrace your later years with confidence and independence, safeguarding your financial well-being and preserving your legacy for generations to come.

Remember, the journey towards a secure retirement begins today and every step taken towards financial preparedness is an investment in a brighter, more fulfilling future.