Don’t you feel the need to plan, strategize, and make your retirement life simpler? The feeling is mutual. Instead of planning and pondering over it, the only factor that makes a difference is action. Actions have the ability to make plans real and goals attainable. So what does good retirement planning include?
An ideal retirement plan involves:
● Understanding the current level of income
● Potential income possibilities
● Creating an emergency fund
● Having medical insurance and whole life insurance
● Creating an all-round portfolio with a good mix of debt, equity, and other instrument exposure
● Having sufficient assets that can be liquidated quickly.
How do you begin retirement planning?
Retirement planning is not rocket science. With a foundational understanding of how finances work, investments grow, and your needs, you can seamlessly and successfully execute retirement planning for yourself.
● Know your financial situation and needs. Estimate your annual expenses, future income, and any other retirement plans you may have. This quick assessment will give you an idea of what corpus you need.
You can plan for your retirement by choosing a corpus you need for an easy life or multiplying your annual income by 12 or 15 times.
● Automate your savings: Set up a regular transfer from your income account to your separate savings account. Treat it like a fixed bill to ensure consistent savings. This is a great habit to help you save more.
You can transfer a fixed amount each month, the remainder of what’s left after income, investments, and expenses, or a mix of both.
● Start early and leverage time. Even small contributions can grow significantly over time. This is because of the compound effect. The earlier you begin, the more time you have on your side. Even if your investments go a bit off track, you have the choice and the time to take action on these plans.
● Maximise employer plans: If your company has an EPF program, try to maximize it. Start investing in the National Pension Scheme (NPS) as early as possible. This will allow you to season your investments for a long time and benefit from tax-free returns.
Annuities are another plan that you can have. These allow you to include lump sums or frequent returns in your retirement planning journey.
● Seek professional guidance: Talk to a financial advisor and seek their advice if you have questions about retirement plans. They can help you choose the right plan, adjust your strategy based on your goals, and help you attain your retirement planning goals. You will also get the benefit of their experience and expertise.Remember, a secure retirement is built on small, consistent steps. Implement a few of these easy wins, and you’ll be well on your way to financial freedom. Taking action now is crucial. The sooner you begin planning, the more time your money has to grow. Don’t wait any longer; read more, get educated, ask questions, plan, implement, review, and take corrective action if needed. Make smarter decisions for your future.