Here’s how to plan for your retirement corpus
Calculate your expensesYou should determine your current expenses in relation to income which will give you a fair idea about how much you can save. Make a list of all your current expenses and payments on loans and investments
When you retire, your expenses may be different, for instance, medical expenses. As a senior citizen, you may be more prone to illness and diseases and with rising medical inflation, routine checkups may cost much more than today. Factor in the added costs of medical treatment into your list of day to day living expenses when deciding how much to save for retirement.
Short term versus long term expensesFrom your daily cup of latte to your cable TV subscription, your monthly expenses are recurring and short term in nature. Conversely, long term commitments such as home loan payments have implications for your credit worthiness. If you plan to pay your home loan until its full term, you will need to save accordingly from a retirement corpus perspective.
By tracking your expenses, you can not only build financial discipline but also get a fair estimate of your current living expenses and debt obligations. This can help you realistically estimate a retirement amount.
Lifestyle expectationsIf you’re a believer in the saying,’ life begins at 60’, you probably have a lot to look forward in the post retirement phase of your life. Travel, buying a retirement home, donating to charity and participating in community activities may be some of the things on your agenda, post retirement. To maintain your existing lifestyle well into old age, you would need a retirement corpus that takes into consideration all your aspirations for the future.
If you expect to support your children’s education and marriage expenses, your retirement plan will need to account for that as well.
Diversify your investmentsYou should not invest in any one single financial instrument as that has a huge risk. You can diversify your investments as per your current income and saving potential. If you have moderate tolerance, investing in property and even stocks is a wise decision as it will give you inflation-beating returns. Depending on your specific needs, you can invest in short term assets such as Liquid Mutual Funds or longer term options such as Public Provident Fund or Fixed Deposit schemes.
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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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