Planning for retirement doesn’t solely mean that you need to plan your finances. It requires a combination of Personal and Financial Planning. Personal planning determines your satisfaction during your retired life. While financial planning helps in budgeting your income and expenses based on your personal plan.
Personal Planning can be done answering a very basic yet a powerful question yourself. How would you want to spend time during your retirement?
Would you want to travel the world? Or pursue your hobby which you didn’t have time for? Sign up for a course that you would want to learn? Or volunteer at an NGO? Or start an entrepreneurial venture?
Try and understand your lifestyle needs and preferences which will help you estimate your financial needs to achieve the goals.
Financial Planning will help you estimate whether you have adequate retirement funds to achieve the kind of retirement that you are envisioning. Mostly, income during retirement would be either through government pensions or employment-related sources or your personal investments.
Below steps would help you with planning for retirement income:
- Budget your income and expenses to identify any shortfalls or surpluses.
- Understand the various retirement income strategies.
- Review and compare the retirement income options.
Working towards your Retirement Plan
Upon understanding the various options, you need to start investing regularly. For this, Start investing a fixed portion of your salary: Save at least 20% of your salary and gradually keep increasing the amount. The more you save, the more you would be financially independent in your retirement years.
Invest your salary hikes, bonus, and refunds
You are doing just fine without any extra money. So, any excess money that comes your way should be invested. Do not spend this excess money on things that you don’t need.
You need to prioritize your goals based on their importance and time. For instance, if you are to decide between your child’s educations or your retirement account, most of us would be willing to sacrifice our earnings for our kids’ future. But, it’s okay to be selfish sometimes. In other words, you can always take an education loan for education, while no loan would be given to you for your expenses during your retirement. Your child has their entire lifetime to repay the loan.
Delay your retirement
The average retirement age is 62 years. However, this varies from person to person. Age is just a number! Try to keep your self-engaged until your mental and physical strength supports you. If you are an entrepreneur, work until you know that the time is right for retirement. If you are a salaried employee, look for alternative options that would help you earn money. Be it conducting tuitions or training other young professionals, opening a restaurant, etc.
Limit your retirement spending
It is advised to limit your spending during your retirement years. It is quite difficult, but be strict with your expenses. Avoid those unnecessary urges to buy something which isn’t that necessary.
Why Should You Plan for Retirement?
Retirement should be the best time of your life, where you are relaxing with your spouse by sipping cocktails by the beach or a coffee by the countryside or travelling the world. To have a worry-free retirement you should be able to reap the benefits from what you have earned during your employment.
When we are young, we have the tendency to postpone our retirement planning. This is usually because retirement is too far to worry about in your 20s or early 30s. Well, for your dreams to be realized proper planning for retirement income should be done.
What Should be the Ideal Retirement Age?
Every person sees life in a different way. Few want to retire as soon as they turn 40 or 50, while few at the exact retirement age and few would never want to retire. There is no ideal retirement age for everyone. It differs from person to person. There are a number of factors that affect this decision for each person.
Following are the reasons as to why planning for retirement is important:
- You cannot work forever
- Higher average life expectancy
- Higher financial obstacles, eg: medical emergencies
- Best time to fulfil life aspirations
- Relying just on one source is risky, eg: pension
- Do not depend on your children
- Contribute to your family even during retirement
- Start planning early and diversify your investments
Deciding on retirement age is not just dependent on these three factors. The number of people dependent on him/her, financial stability and lifestyle are few of the many other factors that help one decide on the retirement age. Ideally, in India, people do work up until the age of 60 or 65 but with long working hours and routines in a job, people can be tired mentally and physically. Switching jobs is always not an option with high unemployment rates. Also after 50, it gets difficult to find a new job too and there won’t be much potential in the existing job. So it is important that people usually plan their retirement with the retirement age of 50 in their mind instead of 60. Well, there is no harm to be able to retire late with excess money if one decides that they will not retire at 50.
Use the Retirement Planning Calculator to find how much to save per month for retirement. Retirement age calculator and retirement date calculator are also a part of Upwardly Retirement Calculator. Upwardly Retirement Planning Calculator is simple to use and comprehensive in its approach. Happy Retiring!