AM I ON TARGET FOR RETIREMENT PLANNING?
We all know that investing is important. After all, you want to enjoy your someday, you want to accomplish your goals, live your dreams, you want to live a respectful, confident, peaceful, and comfortable life post-retirement.
Living your someday, your aspirations post-retirement means creating a roadmap today. As the early you start, the safer you reach, that too in time. Money Multiplier suggests three key metrics to be considered while creating your roadmap for accomplished retirement includes annual investment rate, investment factors, and a potentially sustainable withdrawal rate.
All these metrics are interrelated, so it is essential to keep each in mind as you invest for your financially accomplished retirement.
Let’s say you want to retire earlier than 60, your investment rate would likely increase. On contrary, if you plan to retire later, your investment rate would likely decrease.
INVESTMENT FACTOR IN RETIREMENT PLANNING
Money Multiplier’s investment factors can help you track where you are on your journey of retirement planning. It’s simple. All need is to multiply your income at frequent ages by your investment factor to see how much you should aim to have invested by that point. By setting up investment goals to your income, you can determine whether you are on track throughout your working life.
INVESTMENT RATIO CHART
|Sr. No.||PHASES OF LIFE||INVESTMENT RATIO|
|1.||Early earning age||80%|
|3.||After the Birth of 1st Child||40%|
|4.||After the Birth of 2nd Child||20%|
|5.||When your children are in school/college||10%|
|6.||After your children are stable in Career||80%|
The above chart defines our investor factor’s thumb rule. Depending on your situation, you may start investing. You may have started saving early or later, saved more or less, plan to retire earlier or later, Your cost of use to lifestyle may be more or less post-retirement. These will all impact your investment factor, which really counts.
Think about these investment factors as milestones along the way.
#1 INVESTMENT FACTOR FOR RETIREMENT PLANNING
Determine at what age do you plan to retire.
This will make a huge impact on how much investments you will need, and your benchmarks along the way.
Of course, you cannot always accurately ascertain when will you retire. Your health and job availability may be out of your control. However, deciding your retirement age and the corpus you need to create for post-retirement, it will help you identify the assets you need to have in your portfolio.
#2 INVESTMENT FACTOR FOR RETIREMENT PLANNING
Determine how you want to live in retirement. Each of us, be it you or me, we are used to a lifestyle. There are certain things that we simply can’t live without. For instance, some people can’t do without morning tea, some cannot live in a small space, some pick only big brands when it comes to clothing or accessories, and so on.
Hence, it is very important to determine your lifestyle post-retirement. Do you want a below average lifestyle of a comfortable and use to lifestyle. You need to then accumulate funds calculating inflation rate.
#3 INVESTMENT FACTOR FOR RETIREMENT PLANNING
Create a roadmap to reach your financial milestones. Knowing your investment factors and understanding the important junctions of your life will help you create a roadmap to financial success. This will help you set your investment milestones along the way.
How to accomplish your financial goals is another piece of the puzzle.
Do not be discouraged or demotivated if you aren’t at your nearest milestone. There are ways to catch up to future milestones through systematic investment planning and asset allocation.