Whenever people think about their financial future, they think about retirement, a financial goal often met with anxiety. The concern chiefly stems from the fact that the goal is far away, and multiple variables can come into play.

Research shows that people like to plan for happy outcomes and that retirement for many people is not a very happy outcome. Unlike professionals, such as doctors and lawyers, who can continue to practice for as long as they wish, corporate employees can feel a bit of anxiety.

You can get a loan for your children’s education, buying a house, car or business, but there’s no conventional loan for retirement. You have to build it yourself. So that is one of the very important reasons we must all be focused on while planning for our retirement; if there is any gap in that goal, you cannot fill that with a loan and gaps in every other financial goal can be filled in with a loan.

Frame It As A Happy Outcome 

Retirement may not be a happy outcome because the image it conjures up is not so good. To tackle this, the first thing you have to do is to frame this as a happy outcome.

People typically save for retirement after taking care of all other needs/goals. Thus, those with a secondary source of income, be it from their investments, rent, or some other skill, can monetize it and feel far more confident about their retirement and future financial self.

Research suggests that people from large families, joint families, or even large circles of family and friends feel less anxious about their financial future and goals like retirement because they have emotional/financial backing.

Acquire New Skills 

Retirement planning is not just about creating a corpus. A financial advisor can help you create this corpus. But the real risk is concentration – you depend on one skill (job) for all your life.

One way to overcome retirement anxiety when you are mulling over retirement is that it is wise to hone or acquire new skills early on to have a secondary source of income that can be monetized. The skill can be a passion you’ve held for all your life since your teenage years —a fitness instructor, yoga teacher, translator, photographer and so on.

Social Circle 

One crucial aspect is having a large family and friend circle can help you feel less anxious about your financial future. Being connected to family helps the mental part of that financial future.

Maintain Your Health 

Another common problem people encounter during the 60s-70s is health. Maintaining your health helps you reduce the cost incurred on treatment. Besides, being purposeful and working at something that gives you joy keeps your health alive and kicking well into your later years.

Unconventional advice around retirement is to not worry about the corpus but build a secondary income. It’s time to drop the word ‘retirement’ from our vocabulary and reframe it as financial freedom.

How To Invest Your Corpus 

Think about it as your financial freedom goal and plan for it. Getting a good financial advisor to plan your asset allocation can be helpful.

The first step should be to estimate the corpus required to retire based on your current age and retirement age. Suppose your current age is 30, and you wish to retire at 60; you have 30 years to accumulate your corpus. Calculate the monthly investment required from today to reach this corpus by 60. You can use a goal or retirement calculator to calculate this.

Once you have accumulated this corpus, you can put this fund into three buckets for a 30-year period. You can invest in conservative products for the first 10 years bucket from which you can withdraw. For the next ten years, consider hybrid funds. For the third bucket, consider diversified equity funds.

When you’re running through your money for the first two buckets, the last buckets get 20 years to compound, and compounding works in your favour for creating wealth. So the third bucket you’ve put into has 20 years to compound, and it will keep your corpus healthy. A good financial advisor can help you achieve your financial goals.

Adopting this approach can change your mind when thinking about financial freedom.

The author is the CEO of PGIM India Mutual Fund

Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.