Retirement Planning – The Best Way To Secure Your Golden Period

American minister Harry Emerson Fosdick once said, “Don't simply retire from something; have something to retire to” and his wise words hold a tremendous amount of meaning even today. Nowadays, people are choosing to retire early, fuelled by the desire to follow their passion after a life spent in the corporate world. Further, even people who retire at 60-65 have a long and fulfilling life ahead of them, given the advances made in health management and longevity. Whether you wish to retire early, or complete your tenure at the workplace, retirement is the golden phase of your life – a time where you can enjoy your passions and hobbies, without worrying about a 9-5 workday or waiting for the weekends. However, none of this would be possible without an efficient retirement plan which can empower you to follow your dreams without being concerned about your financial wellbeing.

What is a retirement plan?

A retirement plan is a strategic financial arrangement designed to secure one's financial future during the post-employment phase of life. It serves as a roadmap for individuals to accumulate and allocate financial resources, ensuring a comfortable and financially stable retirement. Typically initiated during one's working years, a retirement plan involves systematic contributions and investments with the goal of building a sufficient nest egg. These plans vary widely, with common options including employer-sponsored programs such as the Employee Provident Fund or government-supported plans like the Public Provident Fund or PPF. The primary objective of your retirement plan revolves around generating a reliable income stream that supports your post-retirement lifestyle and covers essential expenses, such as housing, healthcare, and daily living costs. Successful retirement planning involves a careful assessment of one's financial goals, risk tolerance, and time horizon, empowering individuals to make informed decisions that pave the way for a fulfilling and financially secure retirement. Ultimately, a well-crafted retirement plan offers peace of mind, allowing you to enjoy your golden years with financial confidence and independence.

Why you need retirement planning

Once upon a time, people considered themselves the retirement plan of their parents, and looked towards their children to support them financially once they retired. However, this practice is now witnessing a transformation, with individuals understanding the importance of retirement planning. For people who have the support of a pension, retirement planning isn’t as stressful, but for countless others, stress becomes the name of the game once the monthly salary stops coming in. To ensure a relaxed and enjoyable golden period, retirement planning is nothing short of imperative, as it enables you to lead a dignified life without worrying about potential medical or living expenses. Additionally, retirement planning can also help you save on taxes and remain independent, thus making it an essential part of your financial journey.

Steps to consider

Embarking on a comprehensive retirement plan involves several crucial considerations. Firstly, determining your preferred retirement age sets the stage, impacting subsequent decisions – whether eyeing a traditional retirement at 60 or contemplating an early exit, this initial choice influences investment strategies. Simultaneously, you can shape your outlook by envisioning post-retirement aspirations, from relaxing with family to fulfilling specific goals or even starting a new venture. The next step involves identifying continuing expenses, such as utility bills and lifestyle-related costs, as these considerations allow for a more precise financial projection. Another important aspect to keep in mind is the creation of an emergency fund within your savings, as this cushions you against unforeseen events. Further, reviewing existing savings, and considering workplace contributions and personal investments, will guide your understanding of the required additional savings, which can then be leveraged to determine a monthly investment amount. You can then complete the retirement planning process by choosing suitable investment options and deciding on a post-retirement income structure, be it a lump sum or regular payments through an annuity plan.

As individuals charting their retirement plan, you have access to a variety of interesting options, from PPF and the National Pension Scheme to retirement-focused mutual funds. Whichever route you may choose, remember that the sooner you begin the process, the larger your retirement corpus will be, thereby ensuring greater financial freedom during your golden phase.