Tuesday 31 December 2013

Building Up A Savings Plan For Retirement Years

14:46 By , , , , No comments

Planning for retirement has somewhat become mandatory these days. Especially in a country like India, where we don’t have any real social security system in place, future planning needs to be done. We see so many people getting worried about retirement that they even feel like continuing their job or profession beyond the age of retirement. Adding to the facts, there are around 70% individuals who claim to not be able to meet finances after retirement.

So, if you want to avoid being in a similar state later, it’s advisable that you start with a savings plan from now itself. First and foremost, you need to start investing as early as possible. An early start will give you the benefits of compounding later in life. After years and years of savings, you might be having more than sufficient wealth to live with.

The habit of investment should come before spending. Each month, we have some or the other expenses to pay off like electricity bills, phone bills etc. So make sure you have some money kept aside for such payments beforehand.

While going about searching for an investment and retirement planning, you much select a tax free investment plan. Over the years, PPF (Pension Protection Fund) has been proven to be one of the best savings plan that is retirement friendly and a tax free instrument. Pretty similar to PPF there are ELSS (Equity Linked Savings Scheme) that might serve you well as an investment plan along with being tax-free. Also, if you are thinking of investing money for retirement purposes, it is recommended that you not put all the money under one scheme. Rather consider diversifying your portfolio. If you don’t diversify, there is a risk of losing all your investment and limit returns over it.

When calculating the retirement corpus, people often tend to forget some of the important future expenses. These may include essentials like medical cost, household expenses and much more. So make sure each one of these are included.

Sometimes all of this planning process might not be possible by only you. It is always good to hire a financial planner who helps you out in planning and portfolio management. He brings in his expertise and knowledge so that you build up a safe future ahead.


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