The Buyt Desk
When it comes to retirement planning it is still a vague concept for Indians. The PGIM India Mutual Fund Retirement Readiness Survey 2020 showed that half of the Indian urban population had no plan for their retirement. Not only did they lack a plan but are making blunders with whatever little they are saving.
Mistake number 1
Not considering Inflation
Only one in five Indians consider inflation while planning for retirement. There is a myth that expenses will drop once you reach old age, so you do not need a huge corpus. But it is exactly the opposite. You must calculate how the value of money changes with time. A Rs 500 note could have bought more stuff for you in early 2000 but in 2021 the same Rs 500 may not have that kind of value. With old age you would need more attention to your health and medical expenses will increase. Similarly, you will not have an active inflow of income but there definitely will be routine expenses as well.
Mistake Number 2
Not aware of the amount required to retire
You should sit down and calculate your expenses. Take the outer limit of every expenditure that you make consider inflation, medical expenses, grocery, electricity bill. Add this up to have a figure in front of you. Evaluate it with your investment and the return that you will earn on them. Match the figure and see are you investing enough to reach the goal of retirement expenses or not.
Mistake Number 3
Depending on others for retirement
As per the Retirement Readiness Survey 7 in every 10 individuals believe that their children will take care of them in retirement. But in reality, only 3 in every 10 individuals get retirement support from their children.
Mistake Number 4
Too early to start
Thinking that you have enough time in your hand and retirement planning can wait. But this delay will cost you. The sooner you start better you are. Organize your saving and investment in a manner that you dedicate a fixed amount towards your retirement planning right from your first salary.
Mistake Number 5
Don’t dip into your retirement fund for funding something more urgent
Just remember nothing is more urgent than your retirement preparedness. Whenever you shortfall does not eye this corpus for fulfilling short term events like vacations, marriage or children education. This corpus has a purpose and does not deviate from the path. Whether it is your NPS, PPF or EPF fund, if you have been saving it for retirement, don’t dive into it the minute you face a shortfall.
