Who does not want to have luxurious retirement years?
The most beautiful phase of life, where there is no tension of upbringing kids, going to office?
Do you need to plan for your Retirement to make it ever beautiful?
Yes! You need to plan to have a beautiful, comfortable retirement life.
Table of Contents
Just like you plan your short vacation, now this is the time to plan your long vacation.
I know you must be thinking and feeling relaxed, oh! Come on. I have already have a pension plan to take care my retirement years.
You might also say that I will get pension/EPF from my employer. So, please don’t bother me now.
But are you aware that how much amount will be needed in your retirement years on monthly basis or
What should be your pension amount if you want Rs 1 lakh ( today’s cost) in your retirement after 10/15/20/30 year later.
How much corpus you should accumulate to have the same standard of life in your retirement years?
Here is a quick, brief guide.
If your present monthly expense of Rs 50000 per month,Retirement Corpus you need
|
Present Household Monthly Expense |
Inflation | Time left to retire | Monthly expense at retirement at age 60 | Money required for 25 years long retirement |
Money required for 30 years long retirement |
| 50000 | 6.5% | 10 | 93856 | 2.25 Cr | 2.58 Cr |
| 50000 | 6.5% | 20 | 176182 | 4.21 Cr | 4.84 Cr |
| 50000 | 6.5% | 25 | 241384 | 5.77 Cr | 6.64 Cr |
| 50000 | 6.5% | 30 | 330718 | 7.91 Cr | 9.10 Cr |
Analyzing the above table will help you understand where your finances are right now and how much more you need to accumulate.
The balance amount can be achieved if you plan it well either yourself or with the help of a financial planner
Looking at these huge figures, Are you ready to drop all your armors?
Wait! We have a solution for you
Looking this hefty amount, you may be ready to give up all your armors or be ready to fight i.e. to achieve the target amount.
If you are ready to fight, then it is OK. But if you have made up your mind to give up, then please stop.
Look how you can achieve your target without burning a hole in your pocket. Ways are given below.
The key is to start early and pay less.
More you delay, the more you pay.
This is up to you how you want to achieve your retirement corpus.
Power of compounding – why to start early?
This table will show you that how power of compounding can do wonders for your investments.
More time you have, the lesser you pay.
| Age at starting SIP | Monthly SIP | Total amount invested till age 60 | Accumulation at age 60 |
| 25 | 5000 | 21 Lakhs | 3.21 Crore |
| 30 | 5000 | 18Lakhs | 1.75 Crore |
| 35 | 5000 | 15 Lakhs | 94Lakhs |
| 40 | 5000 | 12Lakhs | 49Lakhs |
| 45 | 5000 | 9Lakhs | 25 Lakhs |
| 50 | 5000 | 6Lakhs | 11 Lakhs |
| 55 | 5000 | 3Lakhs | 4 Lakhs |
Depending on your investment amount and when you have started, only three things can happen
- You catch the bus
- or miss the bus
- just about to catch the bus, but……
Where ever you save/invest your money, it is your choice.
If you wish to save in fixed income instruments such as PPF,FD, NSC, Debt Mutual funds
You should be mentally prepared to pay more as interest rate is low in these instruments but the amount required is high
If you can take little risk you can invest in equities too.
Consequences of investing in your 50’s
In later years of reaching retirement I mean approx after 50 you have less time left for your retirement, so high equity exposure is not good for you. It might be a risky bet. So you have to pay more.
Mind it; it is the time for your kids’ higher education too, where you have to pay high college/coaching fee also.
You can ignore child education/ child wedding but please don’t miss this Retirement Planning
You might get loan for your other requirements like child education/wedding but for Retirement income you will not get any loan.
How to plan for Retirement in India
- Calculate all your investments maturity i.e. from PF, PPF, EPF, NSC, FD and Life Insurance.
- Subtract the amount from the final required retirement corpus.
- Find out how much shortfall is there.
- Take into account your rental income.
- Start a SIP, comfortable amount to you.
- Whenever there is any surplus you get, take some amount and invest it for your retirement kitty.
- Whenever there is pay hike, increase SIP amount,
- If you find that with your present savings/investments you will not be able to make it.
Delay your retirement for few more years, either by taking any other employment or business etc.
Few online calculators from where you can calculate your Retirement corpus and the amount you need to save monthly
https://www.kotak.com/en/calculators/retirement-calculator.html
https://www.sc.com/in/insurance/retirement-plan/
https://www.hdfclife.com/retirement-planning-calculator
Where Should I invest for retirement in India
Another very important question comes in mind. OK! I have calculated the amount I would require. The monthly investment is also known to me.
Now what is the next step?
Ideally you should start investing in Mutual Fund SIP. You should break down your SIP amount in 4-5 good mutual funds.
Don’t forget to invest in different schemes of different categories i.e. large cap, multi cap, mid cap, small cap, balance cap or other categories of mutual funds.
This strategy not only reduces the risk but also increases the chance of getting better returns.
We at Best Invest India Financial Advisors provide Retirement Planning Services to our clients.
In Retirement Planning, we not only calculate how much amount is to be accumulated but also help you to dump non performing schemes or schemes which are not suitable to you as per your goals.
| 1. | Tell you your present financial status w.r.t your Retirement Planning |
| 2. | Make provision to keep a separate fund as emergency or contingency fund |
| 3. | Tell you that how much life cover, medical cover, critical illness cover and accidental cover is needed |
| 4. | Suggest and recommend you to liquidate certain investments which are not appropriate for you ( as per your life goals) |
| 5. | Financial/Retirement Planning elaborate your all financial products to you an their benefits. It also makes you aware that approx how much money you will get from them in future. |
| 6. | How much you need to invest to have comfortable retirement years. |
| 7. | Retirement Planning tells you how & where to invest this money.
It also helps you to gain maximum benefit with minimum risk. |
| 8. | Retirement Planning helps you to prepay your loan amount by making different provisions. |
| 9. | Retirement Planning allocate your funds for different needs so that you can easily achieve all your goals. |
| 10. | In nutshell makes your financial life stress free and ensure you get all benefits as planned.( Kindly note that review of Retirement Plan is mandatory if you want to achieve what you need) |
Conclusion:
Retirement is a pleasant phase of life. It should be planned well in advance. Whatever amount of huge wealth, good cash flow you have even then it is always better to ensure the regular cash flow in your retirement years.
You never know, what will be your health, wealth and other circumstances in future life.
Retirement Planning plans everything needed for you and your family including legacy.
