Considering inflation and the resulting fall in the value of money over time, one needs an amount equivalent to 80%-90% of his/her total income during retirement.
How to start retirement planning?
The earlier you start planning for retirement the better. It takes time to accumulate sufficient wealth for stress-free retirement life. A number of retirement-focused financial products are available in the market. It is important to formulate a retirement goal before investing in any retirement plan. Everyone has different income and retirement goals. One should use a retirement calculator to ascertain the amount one needs to save for retirement. A retirement calculator will give a clear picture of the resources you need to commit to achieve retirement goals. Prepare a comprehensive retirement investment plan once you have a personalised retirement goal. A retirement investment plan consists of investments in multiple products all focused on achieving retirement goals. A pension plan is a base on which a comprehensive retirement plan may be built. New age unit-linked insurance plans have emerged as a popular option for retirement planning. Investing in retirement-focused ULIPs may help you build a substantial corpus by the time you retire.
Contributing towards a retirement investment plan diligently will most likely help you achieve retirement goals. However, market-linked products can never provide cent percent assurance. As an investor, you should continuously monitor your retirement corpus and look for shortcomings. Look for certain signs that will tell about the need to tinker with your retirement planning strategy.
1. Not enough returns
Only consistent returns over several years can help you achieve retirement goals. Retirement plans invest the money either in bonds or in equities. Government and corporate bonds are a preferred choice as they are relatively safe when compared to equities. However, stability comes at a cost. The returns from bond investments can be low which leads to slower growth of the retirement corpus. If the value of your portfolio is not growing at an acceptable rate, it is time to modify allocations. One can shift a part of the investments to equities. If you have invested in a ULIP, you can utilise the fund switching option to move some funds to equities. Equities may give better returns and are relatively safe over the long term. One can also opt for certain government-run schemes that offer relatively higher returns. Conduct thorough research before making any changes to the portfolio. Take into consideration the performance of the fund, credibility of the provider and the inflation before finalising an investment option.
2. Lack of sufficient savings
Once people start putting aside money for retirement with a goal in mind, they realise they have not been saving enough. Savings fall short if you do not put aside sufficient funds or if you start late. If you start late, it will be difficult to build a retirement corpus even if you save a substantial portion of your income regularly. The best way to mitigate the risk of a savings crunch is to start early. If you start investing in a retirement investment plan when you are young, even a small amount will compound and lead to a large corpus at retirement.
3. Increase in expenses
Most people start retirement planning with the assumption that the expenses will reduce after retirement. The expenses reduce to an extent but the gap between pre and post-retirement expenses is not very large. The correct way of retirement planning is to take the upper estimate of expenses and plan accordingly. Major expenditure components should be taken into consideration and a plan should be formulated. For instance, medical expenses rise manifold, which can be managed by having an adequate health cover. Health insurance will reduce the pressure on your retirement corpus. Many other expenses remain the same or increase after retirement. Investing in a pension scheme may help you achieve financial freedom after retirement. Retirement plans help in ensuring that you have sufficient funds to live a fulfilling and stress-free life after retirement.
Conclusion
No investment plan could go wrong if you have planned your investment well, which is why you should actively monitor your investments for retirement or take active advice from subject matter experts. A hands-on approach helps in early detection of shortcomings and necessary modifications can be done on time. Use a retirement calculator to get a clear idea of your needs, start early, save regularly and invest patiently to accumulate adequate funds for retirement.
An ISO 9001:2015 
