Why should I Plan my Retirement?

Whenever a person sees someone retiring, one thought that most definitely crosses his/her mind is, “What about when I retire?” If this thought has not come up yet, it will someday and then you will have to ponder over exactly how you’ll retire? What kind of life would you like to live once you retire? And how exactly can you ensure a happy retirement?

Don’t you worry because with careful planning, you will be able to retire much better than most of your friends and colleagues. Some people can’t imagine retiring, others plan early retirement and still others love their work so much that they don’t want to retire at all! What do you want? Will you have a constant source of income when you reach an age when you are legally not allowed to work? What kind of plans do you have for living a happy, healthy and peaceful life in your life’s retirement phase? Here is the solution to all your problems:

How do I Plan my Retirement?

First of all, you need to have a vision of your future. Secondly, you need to develop long-term goals for realizing that vision. Some of the questions you should consider asking yourself are: How far is your retirement? Have you been saving enough for your retirement? Are your savings enough for buying the home you wanted to? Will you need money to buy a car when you won’t have your company’s car for use? Will your kids expect you to help them with their college expenses while you have to deal with your retirement?

As you start analyzing the things you have, the things you will need and the goals you have to accomplish to lead a good life after retirement, you will begin to form a rough idea of how much money you need to save for your retirement. Then the hardest part of developing short term goals will come up. If you are approaching your retirement you must have saved something. But if your kids are all settled and you are still working, be it to support your family or for pursuing your passion, you will realise that at some point in time your body might not be able to support you so well. For that time, it would be good to focus all your finances on your retirement savings.

The sooner you save for retirement, the better. You should start making extra-large deposits in the years just before you retire so that you can reap the fruit in the near future. But do remember that all your retirement planning, depends on your earnings! You may want to retire at 50 and live comfortably in a foreign land but unless you have a very good bank balance, it won’t materialise. The worst case scenario could be that once you retire, you don’t even have enough money to sustain  yourself let alone travel  or move to a bigger house! In order to ensure that you don’t meet this fate, prepare yourself well in advance for your retirement so you can enjoy your ripe, old days.

What is the Best Way to secure a good Post-Retirement Life?

Your car got scratched and you have to buy another. Your vacation needs a little more funding. And then you used money from your retirement savings in order to support these financial requirements. It’s not a good idea to spend your retirement savings like this. Don’t borrow against your home to invest in a new business.

Understand what a crisis is, and what requires you to actually use the last of your savings.  For this reason, say to deal with a big medical bill or health issue, or a sudden family crisis, you have to separate your retirement savings from medical security and other savings. When buying a home, ensure that the loan would be completely paid off by the time you retire. If you don’t do so your retirement savings won’t last very long and you will spend every last rupee in your savings, trying to fund your son’s higher education or your daughter’s marriage. Is that what you want? Do you really want to retire like this?

Once you have understood that you want to retire with good savings, you should get ready to take financial control of your life by saving for things you want to buy instead of using loans for those purposes. Why? You don’t want any debts remaining to be paid off in your retirement phase. By owning a home before retirement, you have fixed an asset for yourself. You are one step closer to making your retirement more safe and secure.

If you don’t already have a savings account, open one and put something in it, even if it is just a thousand rupees. What’s the point? You need to start saving today. If you have to retire in 10 or more years, you have enough time to make a comprehensive plan to own a home debt free and save up to two year’s income for your retirement. With a home and that much savings, your retirement will be remarkably good.

Knowing how much you need to save each month for retirement is a rather difficult question. To a certain extent saving more than 10% of your income will do for a good life after retirement because your retirement plans could be dashed by an unforeseen financial crisis and obviously you want to be prepared for that too. You know, you can live a fun and adventurous life along the way even after starting to save early for retirement. You don’t need to miss out on life today because you were too busy saving up for tomorrow. So save and spend in the right proportion! If you save enough for your retirement, you will continue to love your life even after your retire.

To clear your remaining doubts, let me give you an example. If you would have invested INR 10,000 in Tata Retirement Savings Fund-Regular Plan-Progressive Plan, after 5 years the value of your investment increases to INR 18486.10, giving you 84.86%   absolute return. Having holdings from prominent houses like HDFC Bank Ltd. Banks, ITC Limited, ICICI Bank Ltd. Banks, Kotak Mahindra Bank Ltd. Banks, Housing Development Finance Corporation Ltd., Reliance Industries Ltd., and Axis Bank Ltd., Tata Retirement Savings Fund aims to provide financial security for investors based on their retirement planning goals. The fund is a financial planning tool for long term, and you can invest any time in this fund. Thus, if you invest in Tata Retirement Savings Fund you can secure your retirement through great returns and live a happy post-retirement life.


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