You retirement plan needs to be a unique reflection of your personal needs as well as those of your family.
Here’s How Can You Start To Plan Your Retirement
Deciding The Retirement AgeThe first step to plan your retirement is deciding the age at which you want to retire. This gives you a timeline to set your retirement goals against. For instance, if you are 25 years old and have decided to retire at 55, you have 30 years to plan for your retirement and build a substantial corpus.
Life GoalsFamily obligations such as the healthcare needs of your parents as well as providing for your children’s education and marriage may be important priorities for you. If you plan on travelling or donating to social causes, you will need to build a sufficient surplus that allows you to be financially independent as well as meet your aspirations.
Debt To Income RatioYour overall debt to income ratio determines your overall credit worthiness. It can also help you decide your future course of action with regard to retirement planning. If you are currently spending more than you save, you need to overall monthly expenditure. Barring essentials such as healthcare expenses and payments towards loans and insurance premiums, it can help you build projections regarding how much you need to save for retirement.
You should also factor in the inflation rates which will give you a clear picture of how your current expenses will look in the future.
Reduce Optional ExpensesIt is important to fulfill your current needs in order to have a quality life. However, if you are not able to save then you can try to bring down the optional expenses which may include weekend trips, foreign vacations, etc. When you reduce such expenses, you can use the amount to save or invest for your future. This will also help you in building your desired corpus within time.
Diversifying Your FundsYou should not invest in only one type of financial instrument. There are many investment options available in the market today. If you are young and have a risk-bearing capacity then you can go ahead and invest in the equity mutual funds, if you don’t want to take risks then you can invest in debt mutual funds.
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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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