When we enter the workforce, we are told to not get too excited and splurge money, but strike a balance between our earnings and expenses. As we grow into the job, we are advised to plan financially for the future, meaning retirement – when we will exit the workforce and lay a little back to conserve energy and enjoy the sunset years. This is one of the most important decisions that people make in their lives to secure the time in the future that is unpredictable. And the biggest mistake many of us make is delaying that decision. While it is ideal to start saving early, it is never too late to make a start.
1) Assess your expenditure
Most of us are expected to work till the age of 58-60, which means we need to plan for sustaining our lives for an average of 25-30 years after retirement. This will include the cost of healthcare, caregivers, lifestyle needs as an elderly person, and daily irregular expenses. All this will have to be factored in against inflation. Funding all these expenditures in one go is not possible for any of us. So, we need to start creating a corpus early on in life. By the time we retire, we will have enough financial security to take care of ourselves.
2) Plan for more
As a rule, plan for a little more than you think you will need at the time of your retirement. Estimate your expenses and find the monthly income figure. Some people estimate that anything above 70 per cent of your last-drawn salary should be good. Invest in financial tools such as mutual funds and pension funds that promise a monthly return around that figure.
3) Start early
It's the golden rule of any investment planning, not just retirement! When planning about retirement, it gets more important. Ideally, people should start setting aside a standard amount from the first year of joining the workforce. And as they grow financially, increase that amount.
4) Real estate
Investing in the real-estate sector is one of the smartest ways to ensure a steady income stream by renting it out. Many elderly people rent out their property. Renal income also ensures that you stay ahead of inflation as rents continue to increase. In addition, if you need a large sum of money immediately, you can even sell the property.
5) Reverse mortgage
It's a relatively new concept in India but popular in developed countries. It's like putting your house as a mortgage to the bank and getting a loan which comes as regular (monthly) payouts.