‘Retirement’ is an idea that seems distant in your 20s but looms uncomfortably close in your late 40s. It is important to be financially secure in your retirement years rather than face uncertainty and worry. But how can you ensure that your retired years are peaceful and secure?
We present a 5-point plan to have a golden retirement:
#1 Buy a retirement plan.
The first step in your journey towards a comfortable retirement, is the purchasing of a good retirement plan. The best retirement plans in India let you set aside a portion of your current income so that you can enjoy regular pay-outs after your retirement. There are multiple options in these, from regular payout ones to income for life, and from ones with critical illness coverage to accrual additions over time. You can study these retirement plans in detail and choose the one that best fits your future goals.
#2 Save, save, save!
The savings habit comes in handy for everyone, from a 20-year-old on their first job to a 40-something juggling many responsibilities. Even if you are decades away from retiring, start a separate savings account for the future today. Aim to add a percentage of your income to this account every month, so that over the years you will create a large savings corpus that you can use in your retirement years. Your savings earn bank interest, and you can maximise them by creating 10-year FDs from them and routing the earnings back to the same account.
#3 Invest in long term options like PPF.
Since it is a while before you bid adieu to your working life, you have a longer horizon to invest money and get bumper returns by the time you are 60 years of age. Look for long term options like PPF (Public Provident Fund) with a 15-year horizon, a high rate of interest, and the option to reinvest for a further 15 years if needed. You can also diversify your investments with ULIPs, mutual funds and SIPs.
#4 Sell your large house and move into a smaller one.
As a retired person, you will probably not require a large house if only you and your spouse will to live in it. If you are close to retirement and the children have already left the home, then you might consider selling the house and moving into a smaller one. This helps you save on maintenance costs for a large house, and you have some money left over from the sale that you can use in your retirement.
#5 Monetise an asset and save the income.
If you have a spare room in your house that you don’t need, you could rent it out on Airbnb or Booking.com and have a regular income coming to your account. Or you can rent out extra office space in your company, or hire your car out on weekdays to travelling companies. Set aside this income in your savings account (mentioned in Point #2) to add to your future corpus.