If you are a diligent saver and feel that you are doing all you can to ensure you have a comfortable retirement, it’s hard to predict how much money you will actually need. So how do you know if you are on the right track when your retirement is years, or maybe decades away? Here are five signs that will show you are on the right track:
You Understand Your Retirement Corpus
To estimate how much money, you will require after retirement, you must be clear about the monthly expense you will incur once you retire. Ideally, you would need at least 70-80% of your current monthly income for your monthly expenses after retirement. In addition to that, you must also consider inflation, which could eat into your purchasing power substantially after retirement. You can also use online retirement calculators to get an indicative figure of your retirement savings. Hence, if you already know how much to save for your retirement, you are on the right track.
You Review Your Portfolio Regularly
When you are young, you can afford to make investments that entail high risks for the sake of earning high returns. However, as you edge closer to retirement, it’s prudent to shift your investments into funds with lower risks. For instance, if you have a ULIP plan, you can invest in equity funds when you are in your 30’s. However, once you near your retirement age, you can switch to balanced or debt funds that offer you stable returns. Hence, it’s important to review your portfolio regularly.
You Have Cleared Your Debts
Clearing debt is that last thing you would want to do after you retire. Hence, strive to repay all your debts before or in your early fifties. Also, as you near your retirement, begin to reduce your dependency on credit cards.
Your Health Cover Is in Place
Health issues are bound to occur as you get older. However, disease and illnesses can easily exhaust your retirement savings if you don’t have health insurance. So, make sure to buy health insurance and stay financially protected against health risks after you retire.
You Have Saved Enough to Fulfil Your Passion
During your working years, you may have postponed pursuing your non-work-related passions. Whether you love travelling, gardening or writing, start thinking about ways to finance them while planning for your retirement. That way, you can start building a corpus to exclusively fund your passion.
Retirement planning is a simple process; however, it takes years of disciplined saving and planning. One of the simplest ways to stay on track with your retirement planning is investing in ULIP based retirement plans like Bajaj Allianz Future Gain and Bajaj Allianz Life Goal Assure. ULIP based retirement plans offer inflation-beating returns in the form of a steady income (pension) after retirement. To invest or know more about our pension plans, visit Finserv Markets and secure the golden years of your life.
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