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It is indeed essential to save and plan for retirement as it is a
lot more urgent than your latest mobile or car or a grand Europe
tour. Most of the people live in the present, without bothering
about their future. Financial planning for retirement is a need of
the hour.
Need for financial planning before retirement :
It is always better to plan your finance in order to accomplish your
goals. Financial planning is required in every walk of life, whether
you are in your 20s, 30s, 40s or at the retiring age of 50. The
amount that you are earning presently would not be sufficient to
take care of your financial needs in future. This is because of the
increasing inflation rates. The value of rs.30,000 that you earn
today may not be the same when you retire. Hence, it is very
important that you started investing money in mutual funds,
insurance and stock markets so that you get a decent return when you
retire.
Steps involved in financial planning for retirement
:
1. Start your retirement plan when you are young:
The reason why financial planning for retirement is looked upon with
much hesitation and even dislike is because most people start
planning their finances during middle age. Hence they have to face
initial resistance and protest when they finally start investing.
This situation can be avoided by commencing retirement planning
exercise a little earlier. It always pays to start early. The secret
of a successful financial planning lies in making an early start. Do
not put your financial planning for retirement off for another day.
Financial planning for retirement at an early age helps in two ways,
1) it reduces pressure on finances at a later stage and 2) it
enables one to aim for an ideal retirement situation and not a
compromise.
2. Make a plan:
You must have a plan in place before you think on saving for
retirement. While it may sound funny and even daunting, you must
make it a point to keep aside some money for medical expenses and
contingencies. Financial planning for retirement is simply your
wish-list of how you wish to spend your life post retirement.
3. Talk to a financial advisor:
You must look for a financial adviser who can assist you in
decision-making process. A financial adviser will help you to
translate your dream in numbers. He will tell you how much you need
to save and where to invest your savings so as to achieve your
retirement amount.
4. Track and re-evaluate your plan:
You always have to ensure that you are on track all the time to meet
your targeted and desired level of returns. A periodic re-evaluation
of your investment plan is required. This is a task that is best
left to a financial adviser.
5. Don't just target your retirement savings:
You should not just focus on your retirement savings. Instead, you
should keep some money aside to make other financial emergencies.
This ensures that you do not rush to withdraw from investments that
are earmarked for retirement whenever you have a financial
emergency.
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