The Buyt Desk
Earlier you start better it is- this is very true when it comes to retirement planning. You must start planning for your retirement as early as you can. Retirement is a long-term goal and thus requires to be planned in a disciplined manner if you want to enjoy a hassle-free retired life. Nowadays lots of people want to retire early and if you are one of those then you need to be more meticulous with your investment and savings. The crucial part of retired life will be the pension that you receive. Your lifestyle post-retirement depends mainly on the amount you receive monthly after retirement. Plan well so that you have a good retired life. Here are a few things that you must do to have a happy, secure and satisfying retired life.
Make your retirement budget and retirement income plan
If you start planning your retirement from the day you start earning, your retired life will be smooth and secure. And if you are planning for early retirement then even more planning and investment need to be done. The more years you lose and go unplanned, the more load and stress you have to bear in the coming years to build a sizable corpus for your retired life. Calculate your essential expenses including rent, food, logistics, clothing, health insurance, life insurance and other conveniences. Based on this decide on the lump sum amount that you need per year for stress-free retired life. But do not forget inflation, consider this factor while calculating. Also, consider the family responsibilities that you will be having post-retirement like kid’s education or marriage or parent’s medical expenses.
Increase your investment
The earlier you want to retire, the more you have to save for retirement corpus. The normal retirement age in India is 60. The thumb rule says that if you want to retire at the age of 60, you have to put 15% of your annual income into your retirement savings after you start earning. Similarly, 20-25% if you want to retire by age of 55 and around 38% if you retire by 50 years of age. Basically, your investment for retirement increases as you prepone your retirement.
Create adequate insurance cover
Even after all the planning, you do for your retirement, you still cannot foresee what you will encounter in your future. Maybe you have accumulated a good amount, enough for a comfortable retirement life but what if you go through some serious illness that will cost you all your savings or if you are no more? You can secure your retirement planning with good life insurance and health insurance. Also, plan your savings considering the premiums to be paid for your insurance post early retirement. Consider buying term insurance cover, critical illness health insurance, medical insurance for self and family and accidental disability cover.
Clear all your debt before retirement
You might have taken some loans for your business, kid’s education, marriage, illness or vehicle loans, clear all these loans before you go for retirement. If you plan to pay up your loans post-retirement then it will definitely cause a hole in your retirement corpus. So make sure all the payments are done and you are debt-free at the time of retirement.
Complete your big-budget family responsibilities
If you have a family, then make sure all your major family duties like child education and marriage, buying a house, buying a car etc are achieved before your retirement period. But if you have some duties which need heavy spending, then do heavy investments so that you have enough funds to fulfil the commitments post-retirement. Never burden your funds that are meant for post-retirement.
Create different sources to earn
You just cannot rely on pension and retirement corpus for luxurious retired life. Yes, a basic simple life with little entertainment can be led with these funds but to enjoy your retired life you need to generate money from different sources. A passive income source is a key to earning even after retirement. To reduce the load on retirement corpus and to make it last longer, extra earning is a must. There are many ways to generate extra income and these two are easy ways
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Invest in real estate very early in life so that you can have rental income for retired life.
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Invest in RBI gold bonds so that it gives extra income post-retirement
These two investments even take care of inflation. Hence these investments are best to generate income post-retirement. Convert your hobby to a profession post early retirement. This will keep you busy and happy while generating a good amount too.
Summing up
Only meticulous planning and good investments made very early in professional life will ensure a good life post early retirement. Planning for early retirement should start in the late 20s or early 30s. The earlier you start investing for retirement, the smoother your post-retirement life. There are professionals out there who help you plan your retirement, seek their help if needed.
