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3 Ways to Save Early to Keep Living Out Your Dreams Post Retirement

Start your investments and savings early in stocks, insurance, and pension plans for a cash-rich retirement to fulfil your dreams.

  • 2,810 Views | Updated on: Jun 13, 2024

Over the years, the thought process of people in India regarding life, work and retirement has changed significantly. Working till the age of 60 no longer appeals to a large section of the working population, especially the millennials. People now aspire to retire early and follow their passion. Many people wish to retire in the 40s and the 50s to have enough time to do things they always wanted to do but could not due to work commitments and family responsibilities.

Whether you want to follow your passion, explore the world, start a business, or relax, there can be many reasons for the desire to choose early retirement. However, one common factor while pursuing your early retirement goal is proper planning and foresight.

All you need to do is preparing a checklist of some seemingly common yet vital points and ensure that you keep ticking them off.

Start Early and Stay Invested

Albert Einstein wasn’t exaggerating when he described compound interest as the “eighth wonder of the world”. Compounding can work wonders for your investments with the potential of giving spectacular returns that can beat inflation by a mile.

However, it would help if you stayed invested for a long duration and let compounding work its magic. The more time you give your investments to grow, the more will be the effect of compounding.

Let Your Money ‘Breathe’

Human beings grow and develop better when they get a lot of open spaces instead of cramped ones to breathe fresh air. The same can be true for money as well.

Do not restrict your investments to one or two options. You can choose from a wide array of investment vehicles depending upon your age, risk-taking capabilities, and retirement objectives.

You can distribute your investments among some popular plans to have a balanced portfolio.

Pension Plans

Pension plans are a great way to counter the financial uncertainties at the onset of retirement. You can buy a pension plan by paying a lumpsum amount and choose the option of a deferred annuity, where you will start getting a pension on attaining pre-defined retirement age.

In this way, you will gain dual benefits-

○ You will regularly get a pension amount irrespective of the market conditions.

○ Your living expenses will be unlikely to put a strain on your finances.

ULIPs

Unit linked Insurance Plans, or ULIPs, combine the benefit of mutual funds and insurance. A portion of the premium paid toward a ULIP is deposited toward an insurance fund, and the balance amount is invested into stocks, debts and other market-linked instruments.

The ULIP returns are exposed to market volatilities in the short term. However, they are known to provide better returns when invested long-term, ideally seven years or above.

Health Insurance

No retirement plan can be complete without adequate health insurance. You certainly would not like to use your retirement corpus for medical expenses or emergencies. A good health insurance plan with riders like hospitalisation and accident benefits can save you from financial hassles.

The general idea of retirement planning is to have financial stability once you retire. However, early retirement comes with many additional thoughts that may include a more considerable retirement corpus, a better contingency plan in the wake of financial uncertainties, and of course, fulfilling your ambitions.

Nothing is impossible, including early retirement, if you take charge of your finances early and start inching toward your retirement goal at an even pace.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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