Know the basics of retirement and how to plan for it

If you are in your 30s or 40s, chances are that you are not thinking too much about investing for retirement. While you’re healthy and working to get a regular income, you might not understand the importance of retirement financial planning, thinking that your salary will last forever. However, the reality is quite different. In the absence of regular income and good health, your post-retirement life may turn into a dreadful phase with financial uncertainty.

Benefits of retirement planning

Retirement is considered as the golden period of one’s life. It’s time when one’s familial obligations are complete and he/she can do all those things for which he/she didn’t have any time previously. However, for that, a prudent retirement financial planning is compulsory. Best retirement planning strategy involves creating a substantial corpus for your retirement by saving and investing regularly.

How to plan your retirement?

You must plan for your retirement right from an early age i.e. in your 20s or 30s. This is the right time to know about the types of retirement and start your retirement planning by taking some proactive steps such as:

• Saving regularly: You should set aside a portion of your earnings every month to invest in best retirement planning tools. Starting from the age of 32, if you can save Rs. 10,000 per month up to the age of 60, you would accrue a corpus of Rs. 33,60,000 by the time you retire. To this, you can add quarterly interest from bank, additional earnings from you job, cash gifts, annual bonus, and money collected from rent, returns on your investments etc. You can use these funds to meet your expenses after your retirement.

• Get extra income: Working freelance or part time over the weekends can open up a second stream of income for you. You can use this income to pay your monthly bills, thus freeing up your job income for savings or investing for retirement.

Earning during your retirement years

Your retirement results in your income stopping right away. However, by investing in best retirement planning instruments with annuity benefits, you can ensure a regular stream of income for yourself even after your retirement. You can even choose a vesting date for your retirement plan, which can be at the age of 45 or more, and also choose the frequency of your pay-outs which can help you sustain a financially independent life after the retirement. You can also invest in mutual funds, Public Provident Fund (PPF), or Fixed Deposits to grow your wealth.