Retirement planning is the process of setting retirement income goals and the actions and decisions necessary to achieve those goals. Retirement planning includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risk. It is an essential part of financial planning.
An increase in average life expectancy increases the need for retirement planning.
Planning for retirement not only ensures an additional source of income but also helps in dealing with medical emergencies, fulfil life aspirations and more importantly financially independent.
Retirement comes in everyone’s life, but before you get ready, you will be facing daily living expenses, grappling with medical costs, and fighting with rising inflation. There are always emergencies in old age. So, must have a sufficient retirement corpus to deal with all these is very crucial. Generally we lose track of a long-term goal unless we have planned retirement planning.
Following are the reasons why retirement planning is essential:
Retirement planning is not an art but definitive steps which requires holistic approach to study one’s current financial health, long-term goals and risk appetite to design a plan that addresses the retirement and other long-term goals of an individual.
It involves a step-by-step approach:
Step 1: Identifying your financial and retirement goals
Step 2: Analysing your current financial situation
Step 3: Risk Profiling
Step 4: Asset Allocation
Step 5: Investment Allocation Strategy
Step 6: Periodic Monitoring and Rebalancing
It is better to seek financial planner /advisor professional advice and create a comprehensive roadmap based on the different stages of your life to meet your financial requirements.
It’s never too early to start. Wealth creation is a time-taking process and usually lasts throughout your lifetime. So the earlier you start the more time your money gets to multiply. By starting early with your retirement planning you can benefit from the power of compounding, manage the longevity risk and maximize your returns from high-risk and aggressive investments options. It’s always wise to start saving early.
Starting late with retirement planning poses few difficulties for creating a strong corpus and sufficient wealth to see you through retirement. However it’s never too late to start. You can take the following measures to make up for starting late:
Retirement planning is ideally a life-long process. You can start at any time, but it works best if you factor it into your financial planning from the beginning.