As a working professional, it is just as essential to focus on the next step in your career as it is to focus on life at the other side of your career – that is, retirement. Amidst setting aside money for investments and other short-term goals, saving for retirement often tends to get sidelined in today’s time. In the recent HSBC Future of Retirement Study, it was found that as much as 76% of India’s working population hopes to retire comfortably, but only 33% are saving up to fund the actual retirement phase.
A large part of this discrepancy between wanting to retire comfortably but not saving up for the purpose comes from a lack of effective planning. This is because it seems easy to plan for an event 5 years into the future, but it seems much harder to plan for 20-30 years ahead. However, planning for retirement is nowhere near as difficult as it seems. Investing in reliable ULIP pension plans such as the ones available on Finserv MARKETS is a good place to start.
If you too wish to know how to plan for your retirement easily and efficiently, here is a helpful guide to take you through the process.
Retirement planning is essentially a process whereby you determine your specific goals for retirement as well as figure out the financial steps required to achieve such goals. A plan for retirement takes into account more than just sustaining life after your work life ends. It takes into account factors such as your desired retirement lifestyle, potential needs, and necessary medical expenses.
In order to understand how to plan for your retirement in particular, here are the 7 steps you must follow:
The first step in any plan, including a plan for retirement, is examining your current professional and financial situation first. Be honest in your assessment of how much savings you have accumulated so far as well as the returns expected from the investments you have made for the future.
Out of this amount, factor in for taxes as well as any short-term and essential purchases you are planning on making in the years to come. This forms the primary basis of your retirement corpus and thereby, your retirement plan.
Apart from the retirement corpus you have determined so far, there will naturally be more sources of income over the course of time, to add to this amount. This can include your expected career earnings, profits from investments, dividends, income from rented property and capital gains.
A useful contributor to these sources of income can be a credible pension plan to provide you with a substantial, regular income even after retirement. The ULIP pension plans available on the Finserv MARKETS platform come with a variety of financial benefits and are ideal for this purpose.
The word ‘retirement’ means different things to different individuals. While some plan to retire to live a simple, modest life of easy means, others plan to retire in luxury. In order to determine how to plan your retirement specifically, you must consider what type of post-retirement life you have in mind. These goals will determine your future financial needs and hence, the overall budget required to fund them.
Planning for retirement also entails planning the duration of how long you wish to lead a post-retirement life. This can only be figured out once you determine a target age of retirement.
For instance: The average human life is factored at 80. If you are 30 years of age and plan to retire at 60, your plan for retirement must account for 80-60 = 2o years of post-retirement life. Moreover, it gives you 60-30 = 30 more years of retirement planning to make your goals achievable.
A key step in how to plan for retirement is keeping an eye out for any financial shortfalls in your planning. If your current retirement savings are more than required to fund your ideal retirement goals, you must stay on track and continue to keep this balance. However, if your current retirement savings are not on-track as per your projected plan for retirement, it might be time to look for financial ways to close the gap.
Our tolerance for risk varies as we grow older. When you are young, early in your career, and without many responsibilities, you might feel inclined to make more high-risk investments. As you grow older and responsibilities increase, your investments are bound to become more conservative.
It is the period in between that is most crucial. It is during retirement planning that you must determine your ideal risk tolerance for investments, in order to meet your long-term goals, including retirement.
While it is important to learn how to plan for your retirement, it is just as important to know when to bring professional financial help into the picture. A professional such as a Chartered Accountant or financial planner can give you perspective and insight into your own growing assets. They can help you plan for your retirement by offering innovative avenues of savings and investment that you might not have considered before.
One of the most helpful tools you can avail during the process of retirement planning is a ULIP pension plan. Here is how a ULIP investment can help you with your plan for retirement:
Now that you understand the process of how to plan for retirement, you might also recognize the need to fund your retirement goals regularly and efficiently. To that end, look no further and avail the Bajaj Allianz Life Pension Plans, available on Finserv MARKETS today!