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The Why, What And How Of Retirement Planning

Financial planning for retirement is as important as it is for any other goal.

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Versha Jain
December 21, 2023
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Retirement planning is vital for financial stability in old age. This process will allow you to enjoy a stress-free life and participate in the recreational activities and hobbies you dreamed of. You can easily address financial concerns by creating a timely roadmap for each life stage.

It is all the more critical as families move from a joint living system to a nuclear one. If you have a nuclear family, you may find yourself alone at some point to take care of financial and social needs. In a joint setup, you could count on the support of others. On the other hand, a nuclear family offers convenience, mobility, and independence.

It is to give you the context of our existing support system and why financial planning is necessary. Retirement planning needs persistent positive actions, just like the school board exam, where students prepare for success. Planning can also help you find solutions if you face adversity like bad health, disability, loss of income, etc.

As each of us may have unique requirements, planning must also be tailor-made. However, here are a few key common aspects that will apply in the planning stage:

How Do you Plan For Retirement? 

Determine The Corpus: Says Harsh Gahlaut, founder and CEO of FinEdge, “It’s important to be realistic when setting targets for your retirement corpus and not to use today’s costs as a benchmark.” After you set the target, review the portfolio regularly to ensure you are on the right track. It is also critical to consider inflation pre and post-retirement and risk-taking capacity, depending on your life goals. You must also consider the years left to retirement to adjust your savings and investment plan. 

Emergency Funds: No matter how much you save, keeping a certain amount for emergencies always works wonders. An emergency fund could cover at least six months of expenses. Store the money in safe liquid instruments so you can withdraw it anytime. 

Diversify The Portfolio: Choose the investment instruments wisely, and include different asset classes that can give inflation-beating returns. Invest the money and forget it until retirement. A diversified portfolio mitigates the risk of loss, so review it regularly. One may also seek help from a certified financial advisor.

Cash Flows: For regular cash flows, Gahlaut advises staggered withdrawals for post-retirement needs. For a steady cash flow, you must invest in suitable instruments like the National Pension System (NPS) or create a corpus to invest in schemes like the Senior Citizen Savings Scheme (SCSS) or fixed deposits, which could offer regular income.

Insurance: While planning for retirement, don’t forget to consider the risks associated with health. So, get suitable health and life insurance plans to secure yourself and your family financially. These come at a lower cost if taken early in life, but even if you have not purchased them, make them part of the financial plan to secure the future.

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