In the present scenario, the major cause of death is no longer the TB, infections, diarrhea. But diseases like heart problems, cancer, stroke, still life expectancy is increasing due to medical advances and changes in human behavior. The fact that one lives longer will feel good but it also brings certain issues like income, medical expenses, lifestyle etc.
For the same one must invest for retirement, the principal objective would be to have sufficient corpus for medical expense, sufficient annuities, enjoying the same lifestyle like today etc.
Adam Smith, the father of modern economics says, “Money makes money “ this not only shows the importance of savings during working life but one can emphasize in meeting retirement objectives, in simple words our purpose lies in planning and to invest prudently.
Earlier retirement only means receiving annuities like pension, buying a house for living, it was a peaceful scenario and no as such planning is required but in the current scenario, the world has changed due to various factors like recessions, economic & political factors etc.
Sooner you start your saving and the more you save, the more money could have been arranged at the time of retirement.
Basic rules for retirement planning:-
- Start investing 5-10% of monthly income – Ideal time to start the investment for retirement planning would be when you started earning. Invest 5-10% of your monthly income in different financial products of retirement planning like PPF, NPS, mutual funds etc.
- Increase investment as income grows: – Another important rule is to invest more when you earn more, of course, inflation and standard of living will not allow but it is a part and parcel of life. We should increase our investment which will result in a handsome amount at the time of retirement.
- Stock allocation rule (100-Age) – Performance of any portfolio is driven from its asset allocation, experts’ advice to invest in equities of 100 minus age for more returns.
- Save 20 times of your annual expense – Knowing your post-retirement expense is very important. Expenses like medical, transportation; holiday, food, health etc will go up due to inflation. Expert assumes that for retirement corpus we multiply our per month expense by 240.
So plan early and plan smartly for retirement. This will help you to live a life of independence in future with your Head held high.