Aspirations for life after retirement vary widely. While some may prefer the quiet life away from the hustle and bustle of a city, others may have an extensive bucket list of places to visit and cultures to experience. Whether you have saved enough is, therefore, a highly subjective question. You might wonder, “How do I realistically determine whether the money I have saved will last for the rest of my life?
To help you answer this question honestly, here are a few points to consider:
Life goalsIf you have always let the needs of your family take precedence over your own, you can let them take centre stage after retirement. Whether you plan to travel internationally, contribute to worthy social causes or start a non-profit, your aspirations play a key role in determining the amount of savings you need to have prior to retirement.
If you are quite the traveler, take the average of your last three annual vacations and add a 25% margin for inflation and incidental expenses. This should give you a decent ball park figure to set aside for your travel needs after retirement.
Financial disciplineIf you are in your 40s, you need to allocate a larger share of your earning to building your retirement corpus. A 25 year old, on the other hand, can get away with saving a smaller amount each month as he is starting to save much earlier.
If you can resist the temptation of spending on near term goals such as buying a house, car or spending on a lavish wedding, you can build a large retirement nest egg that will stand you in good stead in your retirement years.
Investing in a pension fund can help you earn income at regular intervals to meet your routine expenses post retirement.
Tax liabilityDepending on the tax bracket you come under, your salary may be subject to Tax Deduction at Source (TDS) in addition to mandatory deductibles like Professional Tax. While some retirement benefits such as commuted pension are exempt, regular pensions are taxed on the basis of how it is disbursed.
Career transitionsIf you’ve had to switch jobs often due to family commitments or a change in marital status, you may be losing out on benefits such as gratuity and leave encashment with cascading effects on your retirement earnings.
Click here to visit our Retirement Planning Calculator
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.
How to save on gift tax in India?
You need to pay taxes on gifts which exceed the limits set by the Government. However, gifts of any amount received or given from relatives including parents and spouse are tax-free.
6 Factors for Rising Health Insurance Premiums
While the demand for health insurance policies has certainly increased, there has also been a rise in the premium costs. Read this post to know the top factors that lead to an increase in the premiums of health insurance.
What Is FTSE And Why Does It Matter?
Informally referred to as the ‘footsie’, FTSE is a joint venture between the London Stock Exchange and the Financial Times of London. The acronym stands for Financial Times and Stock Exchange, and the indices of this joint venture comprise UK’s most highly-capitalized companies that are listed on the London Stock Exchange.
5 Types of Business Loan For Woman Entrepreneurs
There are now many different types of loans options in India for women wanting to explore their entrepreneurial dreams. Read this post to know 5 of the most popular options.