5 Key Retirement Planning Steps Everyone Should Take
Published On Apr 01, 2021 12:00 AM By InsuranceDekho
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Retirement planning is essential and must be considered by everyone at an early stage of their professional life. That’s because post retirement is a journey in an individual’s life where he/she wants to spend his/her golden years in calmness and peace without worrying about any financial burdens. To be able to enjoy a peaceful retirement phase later in life, you might have to consider starting retirement planning sooner.
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5 Key Retirement-Planning Steps Everyone Should Take
Following are five easy measures to support you with your second innings!
1. Identify Your Retirement Budget
First thing to be done while retirement planning is identifying or creating a retirement budget i.e. to determine your post retirement expenditure. To determine your post retirement expenditure you must list your expenses in order of priority and cover them one by one. You may not have a stable salary, but you can enjoy your post-retirement life the way you like. Be it your daughter's wedding venue, your wife's world tour,Owning a beach house or owning an organic garden. You can prepare for any privilege you have, if you plan early. Get a timetable for both of these events. Designate a budget for each spending.
2. Create a Savings Fund
Don't let unplanned spending burn a hole in your wallet! Planning about what you expect will happen is better than planning for unpredictable circumstances, such as medical emergencies,Unforeseen events or other incidents you may not have predicted. Such unforeseen incidents could exhaust your savings and ruin your preparation. It's a smart option to have assets allocated to those contingencies that might or may not happen to you. Therefore, your retirement corpus should be enough to cover your and your family's medical expenditure to avoid a financial crunch in the retirement period of life.
3. Grow Your Investment
One of the biggest challenges to your retirement corpus is inflation, which is fuelling your investments at a rising pace. It's smarter to invest in equity instruments to fight inflation and accelerate the growth of your money.
4. Start As Early As Possible
It is advised to start your retirement financial planning as early as possible. The sooner you start, the bigger the corpus you're going to collect. Start accumulating at an earlier level to encourage your investments to be compounded over a longer period of time. Treat your retirement with as much priority as your current financial needs and start investing a small sum on a daily basis for this target.
5. Avoid Splitting Your Savings Corpus In Between
avoid the temptation to tap into your retirement fund.
A typical habit for young people when moving jobs is to delete their PF account balance instead of exchanging it. Your retirement corpus will take a massive blow any time you withdraw the PF balance and the balance will still be taxable if it is withdrawn within 5 years.
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Happy and rewarding retirement means different things for different individuals.If you've decided what's going to give you peace of mind in retirement, it's essential to know how you will get there financially.