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Planning to retire? Here’s how you budget for it


A comfortable retirement is the result of intuitive planning. We present tips to do it right.

Are you one of those (rare few) people who want to start retirement planning in their 30s? It is the smartest move you can possibly make. The younger one is, the bigger the head start one gets on retirement planning . However, it is not as daunting a task as one feels – often, a comfortable retirement is within grasp if it is planned correctly.

Consider these tips that will help you in broadening your post retirement options:
 
* Save money every month.

Instead of trying to eke out savings from money left over at the end of the month, do the reverse. Take away a portion of your salary the moment you get it, and place it in a savings account. The bank pays quarterly interest on the savings, so this adds to your retirement funds. Besides, you can invest your savings to make it grow for the future.
 
* Factor in future inflation.

If you spend Rs 30,000 per month today, imagine what your expenses will be 10 years later. By that time, your family obligations and expenses will also have increased. When estimating how much money you will need for the future, you must factor in inflation as well. Generally, the sum you arrive at must be at least 10 times your current annual income.
 
* Repay all loans ASAP.

Loans are given only on the basis of a person's repayment capacity. But repaying even a small portion of the loan becomes difficult when one retires. After retirement, the income stops so it can become impossible to repay the loan. Hence, it is prudent to repay all loans, especially credit card and home loans while still employed. A better idea is to make periodic pre-payments with large amounts of money to finish off the loan faster.
 
* Make sound investments.

You will require a good health plan, life insurance and even investments in equity securities to get good returns on investment. Instead of depending only on your salary or business income, let your investments provide a nest egg for the future. You can also invest in such instruments as PPF or fixed/recurring deposit to increase your wealth.
 
* Buy a good retirement plan.

Retirement plans are excellent instruments that offer the best returns for post-work life. Discuss your options with a financial planner or insurance advisor to buy the best retirement savings plan in India. We recommend the retirement plans from Aditya Birla Sun Life Insurance, which cover the gamut of retirees' needs at an affordable cost and flexible payment options.