Retirement is the cessation of one’s active working life. It is one of the essential parts of financial planning. This is the phase when one has no income but the expenses are higher due to medical expenses and inflation. Retirement solutions help in determining retirement income and the proper planning to achieve such goals.
roy’s Finance offers a range of solutions to manage your retirement life and all the finances associated with it.
Why Is Retirement Planning Important?
All of us want to live life independently and not depend on anyone financially. Retirement Planning helps to plan for your life after retirement. One can be at risk at not being able to accumulate enough funds for his family after retirement or sometimes, death. Moreover, if you save, you can get the desired return in case of any unfortunate event.
Further Reasons Why Retirement Planning is Essential
- Average life expectancy is increasing
- Unforeseen medical emergencies
- Relying completely on pension
- Live life independently and not depend on children
- One’s aspirations can be fulfilled
What Are The Benefits of Retirement Planning?
Proper retirement planning can help to live a stress-free life post-retirement. If a substantial income is earned through correct planning and investing, one can relax and lead a peaceful retirement life.
Proper retirement planning can provide financial security to you and your dependents and help you to maintain your desired lifestyle even after retirement. It also helps you to decide how to use your hard-earned money the best way possible. Proper planning can also help you to overcome any contingencies that can arise at any point in time.
Retirement Planning also helps in tax savings. Long-term investments like PPF and NSC that qualify for tax exemption under Section 80C Income Tax Act are best suitable for retirement.
How To Plan Your Retirement
These are some of the crucial points to consider while planning for your retirement –
- It is very important to know about your time horizon i.e your current age and your expected retirement age. Calculate the number of years left for retirement. For example, if someone is 30 years old and wants to retire at 60, his/her time horizon is 30 years. Therefore, he/she has to plan for expenses until 80.
It is better to start an early investment because the longer the time between today and retirement, the higher the risk involved.
- It is necessary to determine retirement spending needs. Many people have unrealistic expectations about annual spending. It is also advisable to maintain a contingency fund for medical expenses for post-retirement life.
- It is important to assess risk tolerance in retirement planning. A financial advisor will help you to understand it better and allocate the proper flexible portfolio.
- Last but not the least, one must not use the funds kept for retirement planning. One must keep a small amount every month for investing in retirement schemes to be self-reliant during post-retirement life.