Recognize The Importance Of Retirement Planning
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Retirement planning means preparing for a steady stream of money after retirement. It entails setting aside funds and investing specifically with that goal in mind. Your retirement strategy will depend on your final goal, income, and your age.
Why Do You Need Retirement Planning?
Growing old can be expensive. Although frivolous expenses might reduce, medical bills are only likely to rise. Add to that the burden of inflation, and not having enough money to sustain future expenses can cause stress and worry. The purpose of having a retirement investment plan is to ensure financial stability in your later years without depending on others.
Top reasons to have a retirement plan
Here are four reasons why every individual must have a retirement fund:
1. Lack of a social retirement benefit
India has yet to implement a robust social security system with retirement benefits for its senior citizens. Although pensions and employee provident funds do exist, they may not be sufficient to cover all expenses. This is why creating a diversified retirement fund with fixed income and mutual fund investments becomes crucial.
2. Financial independence
For generations, older Indians have depended on their children for retirement support. Lately, youngsters are leading more independent lives. Often, they are unable to support their parents financially. Even if they can do it, being
responsible for yourself will give you more independence to live life on your own terms because you will not be answerable to anyone else.
3. Rising costs
As an investor, you will need to account for rising costs. Inflation is a vital element to consider when planning your retirement. If you are unable to keep up with rising costs, you may have to compromise on your standard of living.
4. Medical emergencies
Healthcare costs are pivotal to understanding the importance of retirement planning. While retail expenses continue to rise steadily, healthcare inflation is growing at an alarming rate. While other financial goals may be negotiable, health cannot be compromised.
When Should You Start Retirement Planning?
The sooner, the better. Although youth in their 20s might not worry about retirement, starting early does give one more leeway. If you have missed that bus, you can start where you are.
A good retirement plan should be segregated into investment, accumulation, and withdrawal phases. Until your early 50s, you should focus on investing and building your corpus. As you near retirement, you should be able to shift the money to safer avenues so that you can depend on dipping into it after retirement.
Conclusion
Planning for retirement must be a non-negotiable part of everyone’s financial strategy. The future may be uncertain, but it can help to be prepared. Diversify your retirement corpus by investing in mutual funds, fixed-income securities, and other government-backed securities. Start as soon as you can so that your later years are relaxed.
Also read- 5 Brilliant Retirement Ideas
