No matter at what stage of life you are in, and what life goal you are pursuing, retirement planning should be a part of your investment journey. Even though in the scheme of things retirement planning may seem far away, it is a good idea to regularly think, plan and invest towards it. The idea of an early retirement is exciting, and the thought of doing exactly what one wants post-retirement is thrilling. However, one must be able to assess how well they are prepared, especially from a financial point of view, to retire early or live the life of your dreams post retirement. A systematic retirement investment plan can make a massive difference in how you go about once you hang your boots. A strategic retirement planning will enable you to understand what your living expenses will be like post-retirement and long term investments will help manage these expenses to have a comfortable post-retirement life.
Here is your cheat sheet on how to go about long-term investments to help you achieve your retirement (or early retirement) life goals!
How much would it cost to get your retirement life goals done?
Start by calculating what it would cost to fulfil your life goals and your projected cost of living when your regular income days are over. Prioritise the costs as either "essential" or "nice to have" to help have more clarity on the minimum amount needed in your retirement savings. There are several online retirement calculators and enablers to help you arrive at this number.
Once this is done, look for a retirement investment plan that offers long-term returns to sustain your lifestyle post-retirement. Here, unit-linked insurance plans (ULIP) may be one of the preferred investment option as they offer you several advantages including market-linked returns, life cover as well as tax benefits. Investing in them during your working years can help you build a sizeable retirement corpus that you can utilize to live your retirement life goals.
Plan for an inflation adjusted corpus
To make sure your retirement plans don't just remain a pipe dream, it's important to start planning your retirement early and realistically. One aspect to consider is the effect inflation will have on the money you're saving. Simply put, thanks to inflation, everything will cost much more than it does today. Hence, it is essential to plan your retirement corpus keeping the future cost of living, in mind.
Have a comprehensive retirement investment plan
There are several financial products available in the market today, and each of them has certain benefits. After analysing your needs, it will be a good idea to start investing in pension plans that matches your needs.
For example, few new-age retirement ULIPs are preferred options as they provide you with tax-free and market-linked regular income for your retired life. Further some new-age ULIPs return the mortality charge deducted during the policy term and also provide loyalty additions to help boost your retirement corpus. They also offer the flexibility to make partial withdrawals from the accumulated funds which helps take care of any emergencies you may face. A long term investment toward these plans will enable you to build a sizeable retirement corpus and achieve the life goals you have set for yourself.
Start small, start early
Starting to invest towards your retirement as early as you can and investing small amounts of money every year will help in reaching the desired retirement corpus. For example, if you start investing 60,000 rupees annually towards your retirement from the age of 25 and stay invested for the next 20 years, your retirement corpus at the end of your policy term will be ` 18,58,152 at 4% interest and ` 29,63,375 at 8% interest. While this amount might seem sufficient and affordable at 25, it is likely that your lifestyle and life goals will change as you grow older. So to ensure your retirement savings can meet your requirement and lifestyle, it is essential to revisit and evaluate your retirement investment plan every few years and top-up your plan as your income increases.
Planning for your retirement is a life-goal you should start investing in at an early stage of your career. There is no better time for it than now. With regular investments, you can build a healthy retirement corpus over the long run, which will enable you to get your retirement life goals done.