Over the course of your working life, you have varying needs and goals. As you cross different milestones, these needs change accordingly. At times, necessities such as paying for your children's higher education or their weddings might take immediate importance. At other times, building your financial portfolio, buying a home or even taking that once-in-a-lifetime vacation may top your list of priorities. Amidst all these goals, remembering to set aside money for your retirement planning might end up taking a back seat. However, with a little planning, this can be changed and you can come up with a good early retirement plan that can be modified to accommodate all your changing needs.
When planning for retirement, cultivating the right saving habits and making the right financial moves are the two most important steps. If done correctly, it can help you achieve financial stability during your golden years. By consciously choosing investment options that will help you beat inflation over the long term, you can ensure that your retirement savings is sufficient to serve your life goals, provide financial security and enable you to have a happy post-retirement life!
Here are four key financial moves to keep in mind, no matter what your life goal is. However, they do become more significant when you are saving towards achieving your early retirement life goals.
1. Evaluate your retired life goals from a long term perspective
During retirement planning, it is important to be systematic and have a long term view. One of the first steps in that direction, is to decide at what age you would like to retire. If you would like to retire early, and hang up your boots as soon as you turn 45 or 50, you must prepare accordingly. Once you know the age at which you will retire, you must then calculate the number of years you will live without a regular income and the amount of money you would require to live your life to the fullest even after retirement.
Pension plans available in the market are designed to be long-term investments, since building your retirement corpus will require a disciplined savings habit over a long period of time. A few minutes of crunching numbers on our Retirement Calculator will help you understand the amount needed to be invested to achieve the desired corpus. It is also advisable to include other contingencies like medical expenses, etc. while planning for your retirement corpus.
2. Start investing from an early age
While it is never too late to start planning for your retirement, it is ideal to begin investing towards your retirement at the start of your career and increase your investments as your earning capacity increases. By building this corpus as your career progresses and your income increases, you will have a healthy retirement corpus when you retire!
3. Importance of insurance
Insuring oneself is very important in retirement planning. And the reason why insurance plays a key role is because no one can be certain about what the future holds. Emergencies can arise anytime throughout your life, but being financially prepared for them can certainly soften the blow. While purchasing a life insurance is important to secure yours and your family's life goals, it also provides a great security net and will provide financial security in case of an unforeseen event. Another important thing one must factor in, while planning their finances early on is purchasing a good health insurance plan with a critical illness cover. Because more often than not, the expenses towards managing these critical illnesses creates a huge impact on one's financial well-being.
Critical illness health insurance plans that cover a wide variety of illness, covers your family and gives you a lump sum amount on diagnosis of any of the covered critical illnesses are a good option.
4. Periodically re-evaluating the goals for your retirement corpus.
As time goes by, your dreams and ambitions change, and so does your circumstances. What felt like a luxury five years ago may seem routine today. Just like everything else in your life, why should your goals remain static? As your earning grows, your lifestyle undergoes certain changes, and your retirement planning should factor in these changes as well. It would be wise to make it a habit to revisit your planned investments towards your retirement every few years. Because the retired life that you would have imagined for yourself at 25, will be different from the one you desire at 35 or 45. Checking in with your retirement goals and the plans you've invested in will help you to understand whether your investment plans will take care of the standard of life you want to live, and to take well-timed steps to ensure your retirement goals are met.
Every stage of your life brings on a unique set of comforts and challenges. Smart and well-timed financial planning will make sure that your retirement dreams do not suffer due to other short-term goals. Making the right financial moves at the right time is crucial for you to build your retirement savings significantly in the long run. A larger retirement corpus will not only secure your retired life but also give you the opportunity to fulfil the life goals that you see for yourself in your golden years.