When it comes to retirement planning, experts suggest that the earlier you start, the better. Because when you start thinking of retirement early in life, you have better chances of building a more extensive corpus that you can use during your post-retirement life and meet your expenses without being dependent on anyone.
In India, many people start their retirement planning by purchasing a retirement plan. While it is a good start, you must consider other important things so that you have a sizeable corpus that would last for at least 10-15 years after you stop working.
Here are a few simple tips to help you build your retirement plan like a pro.
Focus on diversifying your portfolio
Many people in India prefer investing in risk-averse investment instruments like debt funds, hybrid mutual funds, senior citizen savings plans, and retirement plans offered by various insurance companies. While these instruments are great for getting capital security, they provide stable returns, which may not be enough considering inflation.
Hence, you must not shy away from diversifying your portfolio and investing in stocks, equity funds and other market-linked instruments. These instruments give you high returns potential and diversify your portfolio. Make sure that you periodically review your portfolio and adjust the investment as per your changing risk-taking capacity and financial goals at different stages of life.
Reduce your debt
Retirement planning is not just about creating a huge corpus for the future but also about living a debt-free life. So, if you have any outstanding mortgage payments like home loans, you must focus on repaying them at the earliest.
If you have any surplus funds, like interest from your investments or an annual performance bonus, you can use them to repay the debt before the actual tenure. This will help you reduce the overall interest payment, and you can close the debt account faster.
Prepare a budget for all your expenses
When you retire, you may not have a regular income source. But you may still have to take care of many recurring expenses like utility bills, insurance premiums, etc. So, it is paramount that you calculate your post-retirement expenses (both regular and unexpected) and have a fixed budget for each expense.
This will help you be prudent with your finances, as most of the income during your post-retirement life would be from your investments. This will also help you make smart investment choices so that you receive enough payment to care for your post-retirement expenses
Consider the healthcare expenses
As you grow old, you may be vulnerable to various illnesses. Hence, it would help if you made sufficient financial provisions to meet the unexpected healthcare expenses. One of the best ways to secure your finances against medical emergencies is to purchase medical insurance at a young age to get the coverage at a lesser premium.
Make sure that you take a routine healthcare check-up to determine your health status and diagnose any underlying condition. This will help you get quick treatment before the condition becomes severe, and you can avoid expensive treatment.
Remember, it is never too late to start planning for your retirement. Assess your financial goals and start investing in different schemes that suit your needs and fit your budget.