Retirement Planning for Beginners - 7 Golden Tips
1. Re-evaluate Your Risk Appetite
As you have fewer years to plan for your retirement, now may seem like a good time to make a risky investment that could give you a big pay out. Sadly, this couldnâ€™t be further from the truth. Instead of increasing your risk appetite, you should consider investing in safe avenues that promise a monthly income. A retirement planÂ would be a good investment at this time.
2. Consider Compounding
While investing in a scheme that offers compound interest may have been better if you were in your 20s or 30s, thereâ€™s no denying the fact that it will still help you build a significant corpus in time for your retirement. To increase your earnings, find yourself an investment that compounds interest quarterly instead of yearly.
3. Donâ€™t Disregard Debt
Ideally, you shouldnâ€™t retire with the sword of debt hanging over your head. Before you retire, make sure you clear any debt you may have. This could include personal loans, credit card bills, or any other dues you owe.
4. Cut Your Current Expenditure
We arenâ€™t asking you to lower your standard of living. Instead, try and cut corners when you can. If you generally go out to eat every week, try going out just once or twice a month. Donâ€™t make a big purchase like a house or car unless itâ€™s absolutely vital. And if youâ€™re independent, working children still rely on you for money, talk to them about becoming self-sufficient.
5. Postpone Your Retirement
If youâ€™re active and healthy, you could consider pushing your retirement back a few years. Instead of hanging up your boots at 60, you could work until youâ€™re 65, allowing you to earn and save for another 5 years.
6. Make a Move
It may seem bizarre, but retiring in a different city from the one you work in could be a financially-prudent decision. In a city like Mumbai, everything from transportation to housing and even groceries are quite highly priced. On the other hand, if you were to move to a city like Nagpur, your outgoings would decrease significantly, allowing you to enjoy a higher standard of living with less funds.
7. Pull out Your Provident Funds
Depending on where you work, your company may have started a Provident Fund (PF) for you. A part of your salary every month will be deducted and invested in the fund for you. If you find yourself on the brink of retirement, you can choose to pull the money out of your PF and invest it in a good pension planfor yourself and your spouse.
Ideally, you should start planning for your retirementÂ right from the moment you start working. But, if youâ€™ve put off saving till later, donâ€™t worry, you can still enjoy a comfortable retired life, as long as you remember to take theseseven important steps.
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How to Plan for Retirement as Per your Age
"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
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