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  • Writer's pictureSahastha

Retirement planning – Golden rules to get it on track

Updated: Oct 4, 2023

When you hear the word “retirement”, what does your mind picture?

The leisure to do things that you really want to do , such as travel , sleeping till noon , seven day weekends, or simply taking it easy.

Promises of happy retirement can quickly fade away if you have not planned your finances properly. Thankfully, here are some golden rules that can assist you in maintaining a comfortable lifestyle post retirement.

  1. Be an early bird

In India, the salaried workforce eligible to participate in formal provisions meant to provide old age income security constitutes of only 11%. An individual in his early employment stage is generally reluctant to save for retirement. It is always advisable to get started with your retirement savings as early as possible. The earnings or acquisition of funds and channelizing of the same during the earning span of an individual as soon as possible will give phenomenal results. All thanks to power of compounding.

  1. Wise selection of investment avenue

You must visualize your life post retirement and ask yourself a few questions. How are you going to accumulate the corpus for your sunset years and suffice your expenses post retirement. Employees (under formal employment) covered under pension scheme are only 4%. That isn’t a very assuring figure. In today’s era investment product suitable for retirement planning are equity/equity linked investments. These investments will be a good option to provide superior inflation adjusted returns in wealth accumulation phase.

  1. Mitigate the risk of shocking medical bills

Retirement planning would not be complete unless the individual has planned for healthcare management post retirement. Since the longevity of a human body has increased that directly indicates increased medical expenses. It is quite important to build a retirement corpus incorporating medical expenses when one is healthy and young. Enroll for an adequately comprehensive health insurance  for your family separate from medical cover provided by the employer that cover the risk of medical ailments during old age along with life long renewability.

  1. Stay on top of estate planning

Estate planning is another key step in a well rounded retirement plan. Arranging for the disposition of your estate is not a morbid concern but a kindness to those you leave behind. You must ensure implementation of a necessary mechanism that would enable seamless and cost effective transfer any surplus of retirement corpus, to the legal heirs post death. Early on, matter such as a will, trust and power of attorney are necessary.

  1. Sound retirement tax planning

Reducing taxes is an essential piece in preserving your retirement plan. You should select the accumulation products keeping in view the minimum imposition of taxes on the accumulation and/ or withdrawal. You should arrange your investments keeping in view the optimum level of tax concession allowed through exemptions, rebates and relief.

In a nutshell, one of the greatest rewards of life lived well is the peace of mind in your sunset years. Now that you are aware of the golden rules, start planning and investing for the life of your dreams post retirement.

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