An essential life goal, retirement requires meticulous planning. Improvement in medical science means you are likely to lead a long retirement life which increases the chances of outliving the corpus built. There are other things to check out too. In this article, we will list some important things which you must check out while planning your retirement.

  1. Investment in inflation-beating instruments
  2. To build a sizeable retirement corpus, it’s imperative to invest in inflation-indexed instruments. Among the several asset classes, which can win you the war against inflation, equities are your best bet as they hold the potential to offer inflation-beating returns in the long run.

    While stocks are one way to invest in equities, another prudent way is through systematic investment plans (SIPs) in mutual funds. Under this, a fixed amount of money is debited every month and invested in your chosen fund.

    See the track record of the fund over the past 5-6 years and find out whether it matches your objectives or not. Even a moderate SIP of Rs. 10,000 per month in an equity fund offering annualised returns of 12% for a period of 30 years can help you amass a corpus of over Rs. 3.5 crores.

  3. Health insurance
  4. The cornerstone of financial planning, ensure you’ve adequate health insurance in your portfolio while planning for retirement. Rising medical inflation means increased costs and having a health plan is imperative to cushion your finances in the event of a medical emergency.

    It’s important to have both regular and critical illness plans in the portfolio. This is because while a regular health plan only reimburses the actual medical costs incurred, a critical illness plan provides a lump sum upon diagnosis of a critical ailment. Also, treatment cost of critical diseases is high which requires prolonged treatment. A regular health plan may not be adequate to meet such a high cost.

    Having health insurance also means you don’t have to compromise on your investments while building the retirement nest.

  5. Withdrawal plan
  6. Another essential checklist is to have a proper withdrawal plan that ensures you don’t outlive your corpus. As expenses are bound to increase due to inflation, make sure you withdraw only a fixed amount each year.
At the same time, it’s vital to make sure that your retirement corpus also grows so that even if you are forced to withdraw more than required, you don’t dip into the primary capital and run into the risk of outliving the retirement corpus.

To sum up

Experts advise planning for retirement from the day you start earning. An early start gives you more time to grow your money and harness the power of compounding in the long run. Make sure to cover all angles for a stress-free retirement.

Click here to visit our Retirement Planning Calculator

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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