My Quick Takeaways for Happy & Comfortable Retirement Life!
We all live in a fast-paced life. Living in the present moment may sound spiritually perfect, but can you apply this to your financial health? Most of us abhor of a thought of managing money. In fact, most of my friends rely on their husbands or parents for managing their financials. But, they do realize that some point of life, they will have to lead the journey on our own. Whilst we all rely on the divine powers of “Google” for all information, few things still are not in its reach, for sure; and of them is financial planning for your retirement.
While we love to believe that life is a long journey and there is no need to analyse a future 40 years down the line, the truth is that your present choices will affect your retirement in future.
If one pledges that “My retirement will not burden for anyone, anyhow”, then one will not have to live their retired life depressed or at the mercy of their children. We, at Mehta Investment, bring to you three quick takeaways for a happy and comfortable retirement financial planning.
After all, you cannot postpone getting old, then why postpone the plan to retiring rich?
Our world, filled with easy and quick solutions, with the very easy EMI option available now can make anyone afford anything that were once out of their financial reach. Be it buying a Car, Vacations Abroad, Buying Expensive Smartphones, Finance Your Child’s Higher Education, Plan a Destination Wedding etc.
The biggest mistake when you are in a position to buy one of the above, is taking a debt, to cushion your lifestyle. However that is a different story for a different time.
Let’s come back to the point.
1. Retirement is the most expensive financial goal. Then why not plan it ahead?
There are many investment options to consider for retirement planning. Just take a look at the SCSS (Senior Citizen savings scheme), POMIS (PO Monthly Income Scheme), Fixed deposits, Insurance pension plans, ULIPS, Mutual Funds, etc.
However, it is not easy to balance your finance maturely with these options.
A simple step, Right Asset Allocation, is required to manage the risk-return profile of your portfolio. Here, we will focus on planning for your retirement with: SIP + SWP in Mutual Fund (Systematic Investment Plan + Systematic Withdrawal Plan)
Easy Two Steps Process –
Step 1. Accumulate retirement planning through SIP Investment in Mutual funds for the long term.
Step 2. Switch the retirement corpus on retirement from equity to debt MF & start withdrawing monthly basis through SWP
2. What are the key lessons for retirement?
Habitually, people don’t save and plan ahead for their retirement. They hope that when the time comes, employer benefits or their own savings will be enough. However, check thoroughly and you will realize they will not cover all your retirement needs, we tend to underestimate the complexity of retiring and retiring happily. The growing need for maintaining good standard of living, medical expenses, nursing expenses, etc are often neglected.
For instance, my grandfather devoted 50 years of his working life for his organisation. He always assumed that his employer will take care of his needs even past his prime. But when he finally retired at the age of 65, he was left with money just enough for his survival. Soon, when medical expenses mounted beyond his means, he had to rely on his son and daughter. Truth to be told, he did not bother taking a Medical Insurance apart from the one his employer had given. In a nutshell, he took his expenses post retirement for granted and thought his existing kitty will be enough.
However, retirement can be overwhelming. You have time to explore everything, but the burden of questions like to buy or not, to enjoy or not, what if the medical cost is more than insurance, what if I need Full day nurse for anything, how will I manage to gift loved ones, or travel far away which were once in dream but never had time for, can be stressful. Would you be left with enough for the remainder of our life if you use so much money now, will be the thought that will keep you awake at night.
Five lessons I learnt from his mistake*:
a. Start saving for retirement. Not blindly, but save wisely (don’t just rely on PPF, Pensions, insurance, etc but rather get a financial advisor who acts as your wealth doctor and is knowledgable.
b. Start to save early – As early as the beginning of your first job. Remember you are providing precious time for compounding.
c. Take risk when young – Having age on one’s side means you can take risks and earn higher returns by investing in equity markets. But investing in FD or debt at a young age only limits the compounding and growth.
d. Understand the fine prints – Relying casually on anyone may end up having investment products which are mis-sold to you for someone else’s gains. So be well informed. The trick is to trust facts, not people. An advisor who is open to answer all your queries and empower you with knowledge is one to go to.
e. Never spend from the retirement kitty – Deja vu! You have saved for retirement… but at no cost be lured to make any expense out of that fund even financing for wedding or education. Why? Well, it’s important to look at goal-based planning wherein you save something for all your needs. The money you emotionally lend to someone wherein there is no scope for repayment is the worst thing you can do for your own happy retirement.
Five Step plan for happy retirement:
3. How much corpus do I need for a comfortable retirement?
This is all based on assumptions. Contact us to make customized retirement plan for yourself. A rretirement plan is not a ‘One solution fits all’. Hence, connect with a financial advisor for it. I have seen people taking their finance management quite lightly with assumption of knowing everything. But, a simple question – Why not use expertise which is unbiased and improve your Finance Scorecard well?
However the following illustration can provide an idea on how to go about it.
*Few excerpts taken from financial express
Follow the above mentioned three key lessons to enjoy your retirement life without compromising on your current lifestyle or relying on anyone for your needs post retirement. In fact you can plan each and every goal or dream of you life with appropriate investment management.
Summary: The key takeaway for saving for retirement can begin from smallest effort like – (Well, for the ones who are wondering that one cannot stop to live life just to save, My answer is – Make a habit of penning down your expense and you would answer for yourself that how easy it would have been to save rather than taking impulsive decision and spend)
About Riddhi Kothari Mehta (Author) : MSc Finance & Investment from Exeter University, UK, she has worked with Indian Domestic brokerage house as Equity Research Associate. Under guidance of Kaushal Mehta, owner of Mehta Investment, Riddhi has been serving the clients across globe in the area of Digital Paperless Investment. Mehta Investment offers one-stop solution for financial and Investment in digital mode.