What Is Retirement Planning And Why It is Necessary

The biggest question of mine to everyone is “ Have you secured your future “ inspite of earning a lot ..Spending a lot will have ephemeral after some time, but by spending money, my question is ,have you secured life when you go for retire.. If not, then how would you survive without sufficient money as you are at present, leading your luxurious life and what I feel the life which you have led, the same standard of life has to be maintained. Therefore the day you join any organization, your planning for the retirement should be executed immediately. By and large, retirement planning is a process of saving and investing money to maintain the same lifestyle after retirement. It also gives you financial security and same standard of living in your later years. So Retirement Planning means preparing today for your future life, continuing to meet your goals and dreams independently, without worrying about your expenses. Investment at a very initial stage makes the corpus very big, makes your life smooth & happy. We can say that retirement planning is a strategy for long term saving, investing and finally withdrawing money from a corpus which you have built up , achieved financially and comfortable independent 

Reasons for Retirement Planning

• Financial Independence: Older People don’t want to be dependent on their children Since they have lived their lives on their own terms, they don’t want to be disturbed and want to live their own terms.
• Lack of Social Retirement Benefits: Although Pensions and EPF are existing, but they are not enough to cover all the expenses and people have started giving more thrust on mutual Funds, giving more returns compare to other financial instruments to beat the inflation and also making the huge retirement corpus.
• Rising Cost: You must consider the importance of inflation while planning for retirement, which is a vital element. When we consider this, we don’t compromise with the standard of living as we start investing in those financial instruments which are beating Inflation and giving higher return than inflation. Mutual fund is the only instrument which can beat inflation and give return more than inflation.
• Medical Emergencies: While planning for retirement, we can’t ignore the healthcare part as it’s a vital element and integral part of retirement planning. Healthcare inflation is growing at a rapid pace, the cost of medical is also growing at an alarming rate, we need to invest in those funds giving high yield.
• Importance of insurance: Most people don’t think about insurance as a part of retirement planning but let me assure you that it is a most important and indispensable part of your life. It’s the life cover of a surviving spouse. If I am no longer here, she may struggle with financial crisis. Your future is uncertain but planning and strategies help you to minimize the risk, diversify your investment by investing in Mutual Funds, Govt Securities. The sooner you invest, the better you get at the time of retirement.

Steps for Retirement Planning

• Set up a Goal: If you want your money should be grown in crores and crores, you need to fix up a goal and as per your goal, you have invested in that instruments which will help to achieve your goal. Then you must be very aggressive and invest in mutual funds with equity exposure because in the long run equity gives a better return than any other financial instrument.
• Start Saving: The early you start, the better your corpus will be in the long run. Better start today. It is normally a rule in finance that you should save 20 to 25 % of your salary and every year there should be some increment in your investment. Expenses are not fixed, growing at a rapid pace therefore with the same rate your savings should also be increased or minimum 10 % yearly to grow your retirement corpus.
• Emergency Funds: Have emergency funds for unforeseen events. Everyone ‘s life has ups and downs. You can’t avoid all the bumps in the road, but you can mitigate the damage by keeping some emergency funds. If you are not prepared for this, these obstructions may put a stop to your saving efforts.
• Monitoring your portfolio: keep track of your portfolio through your Financial Advisors. In case any change is required, they may do it .

Conclusions: By investing at an early stage, though Systematic Investment plan with an increase of 10% to 15 % increase every year, (step up SIP), you can achieve your Goal. SIP is a game of Power of Compounding and rupee cost averaging therefore you can achieve this, but you should have patience also. Keep monitoring your portfolio through your Advisors. It’s a long-term Investment so just keep on investing through this tool you will be successfully achieve your target.

In this context, I would like to recommend the fund with which I am interacting on a day-to-day basis and feel happy after recommending this. The fund is TATA RETIREMENTSAVING FUND- which has been giving a decent return. The best part of this fund is initially we can opt for its Progressive Plan with 100% equity and gradually with auto switch facility available, we can go to its conservative plan and protect our corpus. The design of this product has plans such as Moderate, Conservative and Progressive to help you build up your corpus bigger and stronger. Once the corpus is built up and you retire, you can opt systematic withdrawal plan through this your regular income starts coming on monthly basis. 

On the basis of the past performance, and its management who is giving a thrust on the companies with high growth, sustainable business models , low debt and market leaders , we may suggest the person looking for the Retirement Planning provided he or she should have a long horizon, keep on investing in a discipline manner , have patience resulting into a big corpus.

Stay Invested .

The views expressed in this article are personal in nature and in is no way trying to predict the markets or to time them.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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