1. Retirement is the most important long-term goal, yet ignored, and most retiring people are heavy on fixed income assets and probably real estate, while some savers also have income streams like pension or house rent.
2. Retirement preparation has to be managed at two levels -
a) Steady guaranteed income for basic household expenses, and
b) Long-term investment for protection against inflation.
3. While your pension/ annuity/ debt/ provident funds provide the safety for routine expenses, you should supplement that with equity investment for defeating inflation and maintaining your current lifestyle, as you will live much longer than the previous generation.
4. Start saving early in life through simple equity options, like balanced mutual funds, where a monthly Systematic Investment Plan (SIP) of just Rs.3,300 could give you a retirement corpus of Rs.1 Crore after 30 years at a conservative 12% CAGR.
5. If you are starting late, you can still get Rs. 1 Crore retirement corpus by investing in a monthly SIP of Rs.11,000 for 20 years.
6. A few simple rules of retirement planning for the young earner:-
a) save and invest at least 10% of your income for your retirement corpus.
b) Increase investment in it as your income grows.
c) Save 25 times your estimated/ calculated annual post-retirement expenses.
d) Don’t dip into it before retirement, to gain from power of compounding.
e) Withdraw only upto 4% annually from the accumulated retirement corpus in the first 5 years after retirement, after which you can step it up by including the annual inflation in your annual calculation.
f) Take education loan for kids if needed, but invest for your retirement, as banks will lend you for the former but never for the latter.
g) Allocate a percentage of 100 (or even 105) minus your age of assets to equity funds at all times till your retirement.
7. Investors of the new generation also view retirement plan differently:-
a) They don't expect to stay with or depend on their children.
b) They believe that they have worked hard to get where they are and should travel, bond, indulge and live in comfort after retirement.
c) Retirement for them is about doing something different, useful and fulfilling for as long as they can.
d) They use strategies that preserve, protect and grow their wealth.
8. To achieve this retirement freedom, it is necessary to become financially savvy early in life, as all plans related to retirement, viz. life insurance, health insurance, pension and mutual funds, work best if taken early.
2. Retirement preparation has to be managed at two levels -
a) Steady guaranteed income for basic household expenses, and
b) Long-term investment for protection against inflation.
3. While your pension/ annuity/ debt/ provident funds provide the safety for routine expenses, you should supplement that with equity investment for defeating inflation and maintaining your current lifestyle, as you will live much longer than the previous generation.
4. Start saving early in life through simple equity options, like balanced mutual funds, where a monthly Systematic Investment Plan (SIP) of just Rs.3,300 could give you a retirement corpus of Rs.1 Crore after 30 years at a conservative 12% CAGR.
5. If you are starting late, you can still get Rs. 1 Crore retirement corpus by investing in a monthly SIP of Rs.11,000 for 20 years.
6. A few simple rules of retirement planning for the young earner:-
a) save and invest at least 10% of your income for your retirement corpus.
b) Increase investment in it as your income grows.
c) Save 25 times your estimated/ calculated annual post-retirement expenses.
d) Don’t dip into it before retirement, to gain from power of compounding.
e) Withdraw only upto 4% annually from the accumulated retirement corpus in the first 5 years after retirement, after which you can step it up by including the annual inflation in your annual calculation.
f) Take education loan for kids if needed, but invest for your retirement, as banks will lend you for the former but never for the latter.
g) Allocate a percentage of 100 (or even 105) minus your age of assets to equity funds at all times till your retirement.
7. Investors of the new generation also view retirement plan differently:-
a) They don't expect to stay with or depend on their children.
b) They believe that they have worked hard to get where they are and should travel, bond, indulge and live in comfort after retirement.
c) Retirement for them is about doing something different, useful and fulfilling for as long as they can.
d) They use strategies that preserve, protect and grow their wealth.
8. To achieve this retirement freedom, it is necessary to become financially savvy early in life, as all plans related to retirement, viz. life insurance, health insurance, pension and mutual funds, work best if taken early.