What is Retirement?
Retirement is the act or fact of leaving one’s job and ceasing to work, usually because of reaching a certain age or having health issues. It is also the period of one’s life after retiring from work. Retirement can be voluntary or involuntary, depending on the circumstances and preferences of the individual.
Some people choose to retire when they are eligible for pension benefits or when they have enough savings and investments to support their living expenses. Others may retire when they feel tired, bored, or dissatisfied with their work. Some people may also semi-retire by reducing their work hours or workload.
Retirement can have various effects on one’s physical, mental, and social well-being. Some people may enjoy retirement as a time to pursue their hobbies, interests, travel, volunteer work, or family time. Others may face challenges such as loneliness, boredom, depression, anxiety, loss of identity, or financial stress.
Therefore, Retirement planning is important to ensure that one has a comfortable and fulfilling retirement. Retirement planning involves setting retirement income goals and taking actions and decisions to achieve them. It also involves preparing for potential risks and uncertainties that may affect one’s retirement.
What do People think about Retirement Planning?
this week we will discuss the most important planning of your life which is nothing but Retirement planning.
While discussing with many people we have listened to Common arguments at various ages of life to avoid Retirement planning.
@ the 20s “Let me start my career”
@ the 30s “I have just started my career let me enjoy. Will start Retirement planning later on still I am young to start Retirement planning.”
@ the 40s “I have so many liabilities to be completed will manage after few years.”
@ the 50s “Now I have to start but let me complete my EMI first. My entire EMI will be diverted to my Retirement planning.”
@ the 60s “Oh No..”
I have done such a big mistake. “My Retirement Planning would have been started earlier”. As a result of this, I could not able to accumulate the required corpus. Now I will have to work for my daily needs.
Why Do People Avoid Retirement Planning?
There are three reasons why people are avoiding Retirement Planning.
1. Time frame which is available.
Due to the longer period in the 20s & 30s, it looks easy that they will manage to accumulate such corpus.
In the 40s to mid-50s people are engaged with their liabilities so could not start.
Finally in the 60s after Retirement, they realise that they have done a big mistake but it’s too late now.
2. People are not aware of the actual corpus required for Retirement Planning. While in earning stage it seems easy that it will be manageable to accumulate but when actual Retirement comes near people realise their mistake.
NORMALLY PEOPLE LOOK AT RETIREMENT PLANNING JUST LIKE OTHER GOALS. Here people make a mistake they treat Retirement planning just like other goals. In real other goals are just one-time goal while in retirement planning it is for the rest of your life.
Considering longevity this might be as long as earning period.
3. People’s mentalities can be their greatest foe when it comes to planning for retirement. The thought of retirement can seem daunting and negative, causing many to shy away from considering it.
Avoid such mistakes. Don’t keep pending your Retirement planning and enjoy your Retirement Life with Dignity.
Your First Tip is To Avoid Procrastination.
When it comes to planning for retirement, the first step is to banish procrastination. Don’t let the temptation to put it off for another day take hold. Seize the moment and start planning today for a brighter tomorrow
All of us would like to retire comfortably, but achieving our retirement goals successfully requires sensible planning and years of persistence. Instead of feeling the pinch post-retirement, it’s rational to start saving early. All you need to do is start with attainable savings, plan your investments, and commit to the long term.
The Retirement Plans should be designed and implemented as soon as you start working. It’s always better to seek the help of an experienced Retirement Planning professional if you are not knowledgeable enough to make your own suitable decisions.
The Sooner you start, you will experience comfort.
Latter you start, you will experience hardships
What is Retirement Planning?
To describe retirement planning in simple phrases, sow the seeds today and eat the fruits in retirement.
Retirement Planning is nothing but ‘Put your Money @ Work to Earn for your Retirement Days‘.
People always make mistakes in understanding two different concepts Retirement Planning & Retirement Solutions
- Retirement Planning is nothing but an accumulation process of Retirement Corpus – This is an Investment Phase just like sowing on a farm.
- Retirement Solutions is a combination of two processes. One side is disbursements of money as per requirement, other side Growing the corpus to keep pace with inflated disbursements. If anyone fails to manage the balance between growth and disbursements he/she might face old-age poverty. This is working just like a Pension Plan or you may call it harvesting.
A Retirement Plan is a financial policy that enables you to plan for your future income and expenses when you stop working. There are different types of retirement plans, such as:
- Pension Plans: These are investment plans that allow you to save money over time and receive a regular income after retirement. You can choose between different payout options, such as annuity, lump sum, or a combination of both. Some examples of pension plans are Aditya Birla Sun life Empower Pension Plan, Bajaj Allianz Retire Rich Pension Plan, HDFC Life Click 2 Retire, etc.
- Retirement Savings Plans: These are tax-advantaged accounts that allow you to save money for retirement. You can choose between different types of accounts, such as the National Pension Scheme (NPS), Public Provident Fund (PPF), Employee Provident Fund (EPF), etc., depending on your eligibility and preferences. You can also invest your savings in various assets, such as stocks, bonds, mutual funds, etc., depending on your risk tolerance and return expectations.
- Retirement Insurance Plans: These are insurance policies that provide you with a guaranteed income or a lump sum benefit after retirement. You can choose between different types of policies, such as term insurance, whole life insurance, endowment insurance, etc., depending on your coverage needs and premium payments. Some examples of retirement insurance plans are Max Life Guaranteed Lifetime Income Plan, LIC Jeevan Akshay VII Plan, SBI Life Saral Pension Plan, etc.
- Mutual Fund Retirement Strategies: Invest your retirement corpus in a diversified mutual funds portfolio and start receiving monthly payout using an SWP facility. For that, you need to consider proper safety measures for protecting your investment portfolio against disruptions in the market. some examples of BLTP Magic, BLTP-Bucket Strategy, BLTP-Fin Freedom
Why Retirement Plan is Important?
Retirement planning is important because it helps you secure your financial future after you stop working. Some of the importance of retirement planning are:
- Keep Stress at bay: many health problems occur due to a lack of financial income and not being able to fulfil basic needs. Money problems lead to feeling anxious, depressed and constant sadness! Taking care of your overall financial wellness will only keep your health and future secure.
- Leave your legacy: your retirement savings can be planned well in advance and even after you have lived your life, you can pass on your life savings to your loved ones to live with ease.
- Maintain your lifestyle: if you have been living life king-size throughout, you can continue living the same way with your retirement income. You won’t need to sacrifice your lifestyle
- Independent living: having a smart retirement plan will help you stay independent and you will not have to rely on your children to provide you with income.
- Medical Expenses: as you grow older, your body will need to be taken care of in terms of medical requirements. Your retirement plan can secure you with medical bills or hospital bills for the future.
- Relief From Tax: every individual that earns money wishes to reduce their tax charges and have maximized their savings. Our government exempts tax benefits on various financial tools, which can be included in your retirement plan. It is an effective way to plan & secure your future and save money at the same time.
- Tick off that bucket list: your retirement plan savings can be utilized in your newfound hobby or your long-lost passion that you always wanted to take up. Maybe you always wanted to start a small business or a new in-house activity or you wanted to learn something new. You can do it all with your smart retirement savings.
- Living at ease even with inflation: inflation keeps increasing every other day and can be a burden in the future with no job or savings. But, if you have secured your future along with a retirement plan, then even inflation will not bother you. You can continue living in peace.
- Retire Early: if you have started your retirement planning at a young age, you can retire early. You don’t have to wait until a certain age to retire. You can rest assured that your plan will have you covered for a long time.
- You won’t have to sell off your assets/ property: if you plan well for your future or old age, you won’t have to reach a situation where you will have to sell your valuable assets or property to make a living.
- Choose plans as per your lifestyle: if you have a very simple lifestyle, you can plan your savings for retirement accordingly. Maybe you live alone, you have been unmarried, or widowed, and your expenses will be far less. You can save accordingly to have enough amount for yourself.
- Save that extra money: if you plan at an earlier age, you save money on your retirement plan rather than planning for it in your retirement phase. Start early, save a little, get more, and have a relaxed future.
How Does Retirement Plan Differ From Other Financial Goals?
A retirement plan is a specific type of financial goal that aims to provide you with enough income and savings to live comfortably after you stop working. It differs from other financial goals in several ways:
- A Retirement Plan is a long-term goal that requires consistent saving and investing over many years or decades. Other financial goals may be short-term or medium-term, such as setting a budget, paying off debt, starting an emergency fund, buying insurance, saving for college, or buying a house.
- A Retirement Plan is a complex goal that involves many factors and uncertainties, such as your life expectancy, inflation rate, health care costs, tax implications, market volatility, and policy changes. Other financial goals may be simpler or more predictable, such as paying a fixed amount of money for a specific purpose or time period. In simple words, Retirement Plan is a perpetual Goal while all other financial goals are one-time goals.
- A Retirement Plan is a personal goal that depends on your preferences and values. You need to decide what kind of lifestyle you want to have in retirement, where you want to live, how much income you need, and how to manage your assets and liabilities. Other financial goals may be more common or standardized, such as following a recommended budget percentage or using a specific account type for saving or investing.
These are some of the main differences between Retirement Plans and other Financial Goals. However, they are not mutually exclusive. You can have multiple financial goals at the same time and work towards them simultaneously. The key is to prioritize your goals according to their importance and urgency and allocate your resources accordingly.
When Should You Start with Retirement Planning?
Looking for a safe retirement plan is very important to stay financially secure. A systematic retirement plan will let you understand your life goals. Here’s why you should start planning early.
At every phase in your life, your income or financial profile might look different. It is always advisable to start planning at an early stage in life. You get enough time to invest over a long period of time thereby reducing the burden at a later stage.
Typically, your retirement planning should start at the age when you can start earning and afford to save or invest a decent amount on a monthly basis.
How to Plan for Retirement?
Planning for retirement is an important and complex process that involves several steps and factors. Here are some general guidelines on how to plan your retirement based on the search results:
- Understand your time horizon. This means knowing your current age, your expected retirement age, and your life expectancy. These factors will help you determine how long you need to save and invest for retirement.
- Determine your retirement spending needs. This means estimating how much income you will need to cover your living expenses, health care costs, taxes, inflation, and any other goals or contingencies in retirement.
- Calculate your after-tax rate of investment returns. This means figuring out how much return you need to earn on your investments after paying taxes to meet your retirement spending needs.
- Assess your risk tolerance vs. investment goals. This means choosing an appropriate asset allocation that matches your risk appetite and returns expectations. Generally, you should invest more aggressively when you are younger and more conservatively when you are older.
- Stay on top of estate planning. This means making sure you have a will, a trust, a power of attorney, a health care proxy, and any other legal documents that protect your assets and beneficiaries in case of death or incapacity.
Investment Options for Retirement.
you need to choose the best investment options that suit your risk profile and goals. Some of the investment options that can help you retire rich are.
- Stocks: Stocks can give you high returns in the long term if you invest carefully
- Mutual Funds: Mutual Funds are a convenient way to invest in a diversified portfolio of stocks, bonds, or other assets
- Public Provident Fund (PPF): PPF is a safe and tax-free investment option that offers a fixed interest rate
- National Pension System (NPS): NPS is a voluntary retirement scheme that allows you to invest in different asset classes and get tax benefits
- Debt Instruments: Debt instruments such as bonds, debentures, or fixed deposits can provide you with regular income and capital protection
Retirement is a time to rest,
After years of giving your best,
Saving up for this very day,
To enjoy life in a different way.
Investments made and money saved,
For the future that you’ve paved,
No more worries about the grind,
Retirement brings peace of mind.
So sit back and enjoy the ride,
With financial security by your side,
Retirement is a well-deserved prize,
For a lifetime of being wise.
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Most important note: Views expressed above are the author’s own. The objective of this Blog is to share knowledge and info about new ideas/opportunities in Mutual Funds. Neither is this trading website, an analyst website, nor an advisory website. For Mutual Fund Investment success, always do your homework, analysis, and make your own decisions.
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