It’s never too late to save for your retirement
Though there is enough information around us to start saving early for retirement during our career, many of us give thought and attention to it only when we are nearing the 50’s which is like wanting to win the race during the last mile of it. Chances are then 50-50, where we may either win or wind up somewhere in the middle of what we wished. Here are a few tips giving you hints on some smart moves, so there is no necessity for you to search for the panic button.
Plan and determine with focus on the future
If by now you haven’t already calculated how much you need when you retire, then doing it right away should be your immediate prerogative. This means calculating all of your expenses which your future awaits you with, keeping in mind of unanticipated scenarios and inflation, which constantly averages between 9- 10% every year. This mathematics will help you analyze your corpus size and the time it will last with the kind of lifestyle that you plan.
Methods to enhance your earnings during retirement
Should you go through hiccups during your retirement, then there are two methods to help you in balancing it. One is, you can increase the size of your investments, which you periodically do every month, and while the other is you could opt for investments which yield higher returns. Doing so, it needs to be kept in mind that the thumb rule should always be to save 35-40% during the age band of 48-60 years, which would thereby correlate to maximizing savings, rather than the motive to maximize returns.
Avoid being too conservative
It is wise indeed to avoid high risk involved investments during this age band, where the motive, as we have already discussed, should be in maximizing savings. So as to enter on a balanced approach of 50-50 on equity to debt ratio would be ideal rather than getting too speculative on stocks or having a too conservative investment. The latter would also not be able to fetch much results if the investment tenure is a longer one.
Get your health insurance done
You may have been covered under a group health insurance all along, but it is very important that you hold a separate cover. Planning to do this later might actually fail, as most of the insurance companies come with a threshold on age for entering to a policy. You could also check to convert your group cover from your employer into an individual policy when you retire, but whatever could be your plans, do it immediately.
Do not plan for any loans during this period
It would be very wise to finish all of your financial commitments much ahead of your retirement. To enter into a new loan or to travel with an emi during your retirement could only eat out of your corpus that you have planned thereby giving you a nightmare.
Avoid investing in real estate at this juncture
It could be a very bad move to pump all of those life’s savings into property as a retirement option. This in reality means, that you require an additional 10 years for this to yield returns, given to understand the real estate market’s current scenario of appreciating at 3% per annum and its ability to be liquefied. Mutual funds is a better option to be considered.
Look out for tax saving methods
Fixed deposits are the most common practice, when it comes to saving for retirement. Many of us miss to understand that this is actually of no benefit with the current inflation and with the 30.9% tax that it attracts on the interest accrued through it. This actually means your money isn’t growing. Options such as debt mutual funds where you will have to pay tax only at the time of withdrawal could be one of the ideal methods which reduces the effective tax from 30% to about 5-6%.
Those unsuitable investments with you
There are these low-yielding and unsuitable insurance policies which all of us somehow have in our portfolio. Surrendering an insurance policy during the early stages of its tenure makes sense early in the tenure of the plan, instead of doing so towards the end. You could ideally wait for some more time instead of forfeiting those minimal returns it would yield.
It’s never too late for beginning your plans for retirement. It only matters that you have started!