Skip to main content

To Retire rich Start saving and Investing early in life

 

THOSE of us who still have many years to go before retiring tend to think of retirement in terms of fuzzy clichés like tending to the roses, long walks by the sea, playing golf on weekdays, pottering around the house and so on. But those staring retirement in the face, invariably, think of grimmer things like steep medical costs, shrivelling income stream, taxes, inflation and the rising cost of living, and of whether their savings can meet all these expenses. When it comes to planning retirement, the bottom line is this: You either are in a saving mode or you are in a spending mode.

The pre-retirement phase of life includes many financial responsibilities and goals, such as building a house or providing for children's education, besides planning your own retirement. Yet, many of us remember retirement just a few years ahead of the `Rday'. Arriving at how much retirement savings you should have is a tough one, but one can fairly estimate one's needs depending on the lifestyle one maintains after retirement. It will help to prepare a budget that lists what you spend on necessities so that you know how much your monthly or annual expenditure will be in the future. Account for inflation keeping a rough estimate of 7-8 per cent inflation every year. Also, consider expenses that are bound to increase, such as medical and transport expenses. Then again, calculate the expenses that may cease to exist, such as your children's education or repayment on a home loan.

The accumulation phase, where you can save and invest for your golden years can start anytime from the day you start earning and, while, there are many ways that one can save; life insurance is a component that plays an important role.
It is a protection tool that safeguards the interest of your financial dependents in case you die; it also helps you build a cosy retirement egg that you can utilise after your own retirement.

Of course, if you start at a late age, you will have to increase your savings substantially and even cut down on any superfluous expenses. Starting early will help you benefit through the power of compounding, that is, you have more time for your money to grow.

The advantage with life insurance is that it instills a regular savings habit that is systematic with regular payments towards premiums and offers tax benefits on savings, as well as withdrawal on maturity. There is also professional money management that insurance products offer, which is far better than handling it ourselves.

As you approach retirement, you need to assess how long your savings can last in retirement and lead your retired life.


With increasing life expectancy, we are facing a situation where our years in re tirement can be as long as or more than our working years, depending on when one retires.

Reality is that once retirement is reached, the saving period is over. The balancing act at this point is between the desire to enjoy retirement and the fear of running out of money prematurely.

The way the retirement life insurance plans are structured; you get a tax-free lumpsum to withdraw from your accumulated savings with the balance paid as a monthly annuity acting as a regular income stream. But there are ways to supplement this income stream; one can consider working beyond retirement, which could be part time, or, in the immediate future make illiquid assets pay better.

Research indicates that a majority of Indians owning a house much before they retire, the reverse mortgage facility makes the house that one owns, pay a regular income stream for a fixed number of years or through the life of the homeowner.

One can tactfully opt for an insurance policy in retirement that will swap the value of the house on the reverse mortgage option on the insured's death, with the house ownership being bequeathed to the insured's family. This way not only can one earn income from one's house; one can also pass the house to the next generation.

At the end of the day, retirement is a journey and what matters is that you get to your destination with a clear road map and make sure you enjoy the journey.
 

Popular posts from this blog

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Stock Review: Havells

HAVELLS India's stock performance has been muted in the past three months, in line with the weak broader market. But, given the turnaround in its overseas subsidiary and the launch of new products in its consumer durable business, the company's stock may undergo a re-rating.    Havells is India's leading consumer electrical goods company, with consolidated sales of . 5,527 crore in the past four quarters. Its wholly-owned subsidiary Sylvania, which makes lighting and fixtures, has established brands in European, Latin American and Asian markets. Sylvania repre sented nearly half of the company's consolidated revenues in the first half of FY11.    Sylvania's poor financials hit Havells' consolidated performance in FY10. But, this has changed in the cur rent fiscal. Havells has reduced fixed costs of Sylvania by exiting from unprofitable businesses and outsourcing manufacturing to low-cost locations such as India and China. In the September 2010 quarter, Sylv...
Read more

Kisan Vikas Patra - KVP

  Kisan Vikas Patra (KVP) First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows- The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months). KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit. KVPs are available at all departmental post offices across India. These certificates can be prematurely encashed after 2 ½ years from the point of issue. KVPs can be transferred from one individual to another and from one post office to another. ----------------------------------------------------- Inve...
Read more

Health for Wealth - How to buy Health Insurance ?

Tax Saving Mutual Funds Online Current open Infra Bond Application form   HEALTH insurance is a relatively new phenomenon in India. Hence, it is not on the top of the mind for most people to make a conscious commitment towards health insurance. However, it is imperative for each one of us to plan for better health for our families and ourselves. There's no better way than to start with making health your top priority this year. So, your health insurance resolution charter would look something like: ■ Invest in health for wealth: Timely investment in health insurance can help build a security net and hedge sudden dilution of another financial asset class in the event of a health emergency, making it imperative to opt for a comprehensive health insurance plan. ■ Buy a comprehensive health cover that fu lfills your health needs for life: Buy a personal health insurance cover even if you have an employee cover because 'employer provided' health insuranc...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now