STEPS FOR CONFIDENT RETIREMENT PLANNING
The wealth that you create for your retirement purely depends on two major factors
- The investment instruments that you choose, and
- The market trends
While we have no control over the market behaviour, it’s advisable that we focus on one aside that’s selecting the right investment instruments that will help us meet our financial goals.
You can live a financially accomplished, a confidant, and a respectful retirement life if all the choices you made are absolutely perfect.
Hence, it is very crucial to plan for your retirement wisely and thoughtfully. Here are five steps on how you should go about planning for your retirement.
Step #1: Determine How Much Corpus Would You Require For A Financially Accomplished Retirement.
Unless you know your destination, it is very difficult to get there, isn’t it?
While planning your retirement as well, it is essential to have a target in mind, it is important for you to determine how many corpora would you require to accomplish your goals and to live a use-to-lifestyle post-retirement.
To identify the corpus you would require, you need to make certain assumptions – identify your retirement age, life expectancy, cost of current use-to-lifestyle, future cost of use-to-lifestyle, risk tolerance, holding capacity, time horizon, the expected rate of inflation, etc.
You can also take the help of Money Multiplier’s Retirement Planning Calculator to arrive at this target corpus.
Step #2: Start Early, and Retire Confidently
Unfortunately, most of us fail to realise that postponement is their biggest enemy of living a peaceful and confident retirement life. Starting early and ensuring that you have sufficient time on your side is the key to successful retirement planning.
Moreover, as you grow older, your risk tolerance decreases. It gives you lesser time to optimize on compounding. There is even a possibility that you may fail to achieve your financial target.
Step #3: Diversify your portfolio
Diversification of an investment portfolio is a must. Each asset (equity, debt, gold, insurance, bonds etc.) has a different attribute, which helps in balancing one’s retirement portfolio.
For instance, if you are going to retire in more than 5 years, then depending on your risk tolerance, your retirement funds can be channelized primarily into equity, with a 20% to 25% exposure to each debt and gold.
Step #4: Choose appropriate Insurance Plans
Insurance is a must-have in retirement planning. As one grows old, the chances of getting health complication to increase.
Apart from an insurance plan, it is also suggestive to opt for a personal accident, health plan, and critical illness policy from an early age.
This will ensure that you won’t need to break your retirement investments in case something unfortunate is to happen to you.
Step #5: Review Your Plan Frequently
Like other investment plans, your retirement plan to needs to be monitored at frequent intervals to ensure you are on target to meet your financial goals. Also, ensure that your financial plan meets your investment goals in the changing market scenario.
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