A secure retirement is a dream of many but the reality of a few. This is because of the lack of retirement planning, especially for young men and women. For working men and women, basically between 25 and 35-years of age, retirement might be the least of their worries. However, it is the most critical time to think about retirement because retirement planning requires time and an efficient strategy, which works best when deployed early in life.
Here is a retirement planning guide for working men and women to secure their golden years:
- Identify your financial needs and create retirement goals: The first step in creating a fool-proof retirement plan is to know how much you would require during the non-working years of your life. It is important to remember that with time your needs will increase, they never reduce. As you grow older, you would need more money to take care of your medical expenses, support your standard of living, and even create an emergency corpus. As per experts, you would need at least 10-15 times your current monthly income to support your golden years. Based on your needs, you can set your retirement savings goals and figure out effective methods to reach the target.
- Start saving early in life to accumulate significant corpus in the long-term: Irrespective of how small the amount is, it is essential to start saving as early in life as possible. When you are working and young, you have a defined income source, fewer responsibilities, and a physically fit body. Hence, the idea of saving might not appear attractive. But during retirement, you will have a pile of medical expenses in addition to several responsibilities. Therefore, it is best to set a savings target and aim to achieve it.
- Invest wisely to optimise returns for your future: Investments lay strong foundations for the coming years. So, the sooner you begin making wise investments, more secure your retirement years will be. Starting early helps you take advantage of the power of compounding, and also structure your portfolio as per your financial needs, goals, risk tolerance, age, etc. You can opt for Kotak Retirement and Pension Plans to take care of yourself during retirement. These plans help your secure a sense of self-reliance, by guaranteeing a relaxed retired life, assurance of savings and above all your emotional well-being.
- Plan for emergencies to minimise the burden on your retirement savings: The value of an emergency fund is non-negotiable. A significant component in retirement planning is to create an emergency fund for those unplanned events. Ideally, you should set aside three months of your living expenses in a contingency reserve. Also, be strict with the usage of this money, and set guidelines for its usage. Alternatively, you can create an emergency corpus by investing in secure options like life insurance and health insurance plans. Kotak Life offers various life insurance plans to meet your retirement needs. These policies will act as your reliable assets for times of need.
- Work longer to save better for the retired years: Life expectancy numbers have recorded a sharp increase. Also, mounting living expenses require you to work longer than expected and ensure you accumulate significant funds for your retirement. Moreover, you should ideally start planning for your post-retirement career during the working years of your life. This will help you stay independent in the long-term.
Retirement planning is an exercise you should take up as you begin working. Both working men and women should understand the different retirement plans that can work best to their advantage and secure their non-working years.