The life of most people follows a basic chronology that comprises childhood, student life, working life, and finally, the retired life.
The retired life has some distinctive features that set it apart from other phases-
- Once commenced, it never ends.
- People get the maximum time to plan for this phase.
- Despite knowing its importance, many people wait too long to begin the process of retirement planning.
The most common cause of delaying retirement planning is not knowing how to start and the factors to consider while drawing out the plan. However, the whole process can be simplified in few easy steps.
Step 1. Decide the Retirement Type
To begin with, make up your mind about the time of your retirement. Your retirement planning will largely depend upon whether you want a regular retirement or an early retirement.
While you will get enough time to plan and save for regular retirement, you may need to be more aggressive on your investment options if you want to retire early.
Step 2. Begin Early
Starting early gives you the leverage of time. Apart from gaining the benefits of compounding, you will be free to take more risks and afford to rectify some inadvertent investment mistakes.
Delaying your retirement planning will not only cost you losing out on these benefits but also put unnecessary strain on your personal finances when starting out late.
Step 3. Build Retirement Corpus: Freeze on a Number
When it comes to retirement planning, be definite about your goals. Think practically and arrive at an amount of money that you think will be enough to sustain your lifestyle post-retirement. Once done, you will have a target to achieve that can help you in taking decisive steps toward actively building a retirement corpus.
Step 4. Consider Inflation
Inflation is one of the biggest causes of wealth erosion and a silent destroyer of wealth. Try to have an idea about the impact of inflation on your wealth at the time of your retirement and how much would you need to brace for this impact.
Step 5. Post-Retirement Goals
Everyone has a different picture of life after retirement. For instance, your retirement planning will vastly differ depending on whether you want to open a business post-retirement or just happily read a novel.
Access your goals carefully to have an idea of how much savings will help you in attaining your goals.
Step 6. Arrange an Income Source
The dwindling bank interests can no longer guarantee a stable income for a retired person. Therefore, try to have a stable income source post-retirement.
You may consider a reputed pension plan to achieve this purpose. Check our pension plans to get an idea about the amount of pension you can get regularly after you retire.
Embark Upon Your Journey
An old Chinese proverb says, ” The journey of a thousand miles begins with a single step.” The same can hold true for retirement planning as well. The whole process might seem overwhelming at first sight, but it gets simpler once you begin. So, start your journey toward a happy and peaceful retirement with a firm planning process in action.
