Nobody thinks of their own retirement when they are young. For most people, retirement planning comes after their child’s education and marriage in their priority list. But do you think you will be able to maintain the lifestyle of your family after your retirement if you do not start saving from now? The answer is “no”. If you do not plan for your retirement when you are still employed, you will have to regret in your old age.
In this article we will give you seven simple rules of making your retirement planning more successful.
Save systematically and persistently
It is easy to make a financial plan for achieving your retirement goals but it is often difficult to stick to that plan. Retirement planning simply refers to saving up for your golden years. So, start saving a small amount of money every month and keep saving until your retirement. Ideally, you should contribute at least 10% of your salary to your savings for retirement.
Increase your contribution with time
As your salary keeps on incrementing, so should be your contribution as well. Every year, you should keep increasing the amount of your monthly savings. This will not only lead to a huge retirement corpus but also help you beat the effects of inflation as well.
Decide your investment strategy
Investment is one of the best and the easiest way to create wealth. So if you are dreaming of building a huge retirement corpus, investment is the best option for you. Investment involves certain amount of risk, so you must choose a strategy by which you can make sure to get huge returns with the least risk involved. There are different investment plans available in the market. Select the plan that allows you to allocate your assets through different funds with varied risk profiles.
Insurance plans are important
Investing in an insurance plan should be considered an integral part of your retirement planning. Pension plans (also known as retirement plans) take care of your financial interests after retirement. Unit-linked pension plans provide the dual benefits of investment and insurance. Another benefit that the retirement plans offer is the guaranteed life coverage. Besides pension plans, also consider buying a health insurance plan as that will take care of the future medical contingencies in your family.
Pay off all your debts before your retirement
Be it for your child’s education or wedding, or for buying a house or for some other personal reasons, you may have to take loans at least once in your life. But try to pay off all your debts before your retirement. As you know, retirement is the time when income drops and expenses rise. So, unless you are free of debts, it will be hard for you to lead a happy life post retirement.
Start retirement planning as early as possible
You should start planning for your retirement as soon as you draw your first salary. The earlier you start the smaller amount of money you will have to save every month to build a big retirement pot. However, there are people who realise the importance of financial planning only after they reach their retirement age. For them, the option is to buy retirement plans that provide annuities immediately after the lump sum purchase price is paid.
Use a pension calculator
Not many people are aware of this simple online tool. However, a pension calculator helps you estimate the amount you have to invest every month in order to achieve your financial goal. This will help you shortlist the suitable retirement plans for you. Different pension plans offer different premium rates and sum assured amount. So you can choose which of the pension plans will be best for you only if you know how much money you will need at the time of your retirement and how much money you will need to invest in order to achieve that goal.
You may find the above rules useful only if you implement them properly in your retirement planning. As said above, there are different ways by which you can make your post-retirement life peaceful and financially secure. You may invest in pension plans or retirement plans which will help you maintain your lifestyle even after you are retired. Pension plans are insurance cum investment plans so they will also help you create wealth as well. So, if you want to secure your own future as well as that of your family, investing in retirement plans will be the best option for you.