Retirement planning with your first job

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Imagine spending the golden years of your life travelling around the world; drinking to swell your belly; buying that beach house to die happily in or even lying carefree under a Banyan with your stomach full and aspirations satisfied. Now, imagine not having enough money to have any of that. Why? It’s probably because you saved too less or began saving too late.

Retirement planning is planning to be prepared for life when the paid work ends. Done through strategic allocation of savings and revenue, it is meant to ensure your financial independence and readiness to retire. A good financial Advisor Always places Retirement planning at the top of list for their clients. It is considered an important attribute of retirement so you can:

  • tackle unforeseen medical expenses.
  • bare minimum standard of living.
  • plan estate for what you’d leave behind for your successors.
  • not be a burden on others.
  • be flexible to deal with changes.

The present generation believes in spending rather than saving. We are rebellious, extremely carefree and least concerned about the future. The philosophy of living in the present is what is spoiling us into not saving enough for our retirement. With advancements in health care, people are living longer which means they need more money to sustain their lifestyle choices for longer now. So, I’m here to worry you with the necessity of saving from the very first job you land and offer you the best tips to go about the same:

1.Contribute to PF and forget it: Ensure your salary has PF in its structure and forget about it.

PF is a statutory requirement to be part of salaries, but some companies offer you to do minimal contribution to PF.

 

2.Invest early, Invest regularly: My friend buys gold biscuits every month as a solid investment for her future. Not everyone is a gold fan I suppose and hence I’ve made a list of other possible investment plans for the same:

  • SIP (Systematic Investment Plan): Investing pre determined amount of money in mutual funds at a fixed interval (weekly, monthly, quarterly) is called SIP. Every investment adds units of scheme purchased at market price to your account.
  • Liquid investments: These investments aren’t as liquid as money, but better. Investing in businesses, stocks, bonds, real estate and money market funds, etc. are the ever deeming money investment strategies with worthy returns. Liquid investments are emergency funds that avoid debt traps and EMIs. They help you prioritize investing before spending and avoid getting lured of quick market returns.

3.Don’t touch the nest egg: Just do not. You cannot use the money you’ve been saving for retirement to buy clothes for your best friend’s wedding. She will probably get married again but with the savings gone, you’d have lesser for your after 60s. Not a good choice to spend your rainy day money, right? Do not use it till you really have to.

4.Plan your retirement: Of course, this is all about planning for your retirement, what I mean is, planning, deciding when toretire. It sure would set a milestone for you to be prepared. When you know in your head as to when you voluntarily or agedly would be retiring, you’d be able to plan the course of your savings better.

5.Project your monthly expenses: I have a poor habit of spending the money that I carry every day. Someone once suggested that the best way to manage my expenses is to analyze them. That’s when I began making a note of my daily expenditure so I could mark the unnecessary ones out to avoid in future. It is therefore necessary to analyze your bank statements to know your annual account outflow. This includes checking your withdrawals, bill and credit card payments, etc. Take in account the expenses that you won’t incur post retirement (kids schooling expenses, fuel adjustments, etc.) and add your prospect medical expenses to the list.

6.Risk planning: Imagine retiring in a couple of months or let’s say years, yet not having enough for when you do. You may choose high risk, high retire schemes and hope for the best or plan a part time activity for money generation. If you were to ask me, I’d say chose the latter. Hard work pays of satisfactorily, timely but way better than high risk jobs.

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