Retirement Planning in India
Retirement planning is one of the most important goals both emotional as well as financial; ensuring personal well being and happy retired life. Especially in India in the absence of Govt funded pension plans or social security; realizing a comfortable retirement requires years of financial discipline and following an extensive retirement planning process. Dwindling joint family structure and rise of nuclear families has further strengthened the need for a sound Retirement Planning.
Even while you may retire with a handsome corpus in hand; generating a regular annuity and manage your cash flows is an extremely important task and an ongoing responsibility to ensure that one doesn’t run into a financial crisis during golden years of your life. All of us would want a comfortable retired life, only a few are able to plan and execute a successful retirement plan. Retirement planning is not only about making investments into one asset class but involves understanding of a comprehensive asset allocation strategies and planning and allocating dedicated financial resources towards achievement of the same.
The end objective of the retirement planning is such that you have the financial security and resources available enough so that the gainful employment post retirement doesn’t become a necessity
Why Retirement Planning
- Increased Life Expectancy
- No social security or Govt sponsored pension plans
- Dwindling Indian Family structure and rise of nuclear Family
- Medical Emergencies
You should contribute regularly and in a disciplined manner. You might want to skip a year’s contribution or one period contribution thinking that wouldn’t make much difference. However you might be wrong for two reasons. Number one regular investments instils a discipline and number two your contribution during the initial years have a great benefit of power of compounding, which would help during the fag years.
Buying a protection plan is also important
Planning for medical expenses is also important
First step in retirement planning is to know how much money would be enough to sustain the retired life. Besides you would also want to leave inheritance behind you.
- Your current Age
- Expected Age of retirement
- Life Expectancy
- Years after retirement
- Your current Level of Savings
- Return that your current investments are generating
Retirement planning is not merely chasing a target of Rs 1 Crore or merely any number that you might want to chase.