5 Steps to Follow to Setup your Retirement Planning

What does an ideal retirement sound like to you? A relaxed mind, happy weekends, hustle-free weeks or maybe completing your globetrotting bucket list? 

Well, these days retirement planning is so much more than that. It has more than just a magical number on paper. Today one needs to properly plan out the years of post-retirement else the promise of golden years can fade away quickly. 

 

But here are 5 steps you need to take to plan a smooth retirement

 

1. Determining a Retirement Corpus

You and your family have probably used to a certain kind of lifestyle. Now you need to sit down and visualize the retirement lifestyle. Without visualizing the kind of lifestyle you are looking forward to it would become difficult to come up with a plan. The visualization could be an approximate corpus of your expenses post-retirement. 

It is smart to calculate and know a sufficient amount of funds required for the retired life. Consider the amount you intend to spend on your children’s education, their marriage, your travel goals, and so forth while calculating the said corpus.

 

      2.  Starting early planning and investments

After you have come up with a number that would help you lead a comfortable retired life it is better to start early. An early retirement planning will help you achieve your desired goals well within time without financial burden. 

Even a small amount of money that is being saved matters a lot. Thanks to the power of compounding, small financial contributions can create an impact in the long run of the retirement plan.

   

   3. Choosing the investment avenue that fits your needs 

Today there are many equity and debt-oriented products available in the market that can give you the window to reach your desired corpus for your golden days. One can choose these products based on your risk profile and achieve desired returns. 

Mutual Fund systematic investment plan is one of the most effective ways to invest in your retirement planning. One can begin investing based on the investment needs and risk appetite in a mutual fund scheme of personal choice. It is very convenient to invest in SIPs as they can be auto-debited from your savings account every month thus making it a very consistent investment practice. Given below is an example of how one can plan his retirement in the form of a monthly pension (regular cash flow post-retirement). Accumulate Retirement corpus by investing through SIP in Equity mutual funds. Then switch the retirement corpus on retirement from equity to debt mutual fund & start withdrawing on monthly basis through SWP Systematic Withdrawal Plan.

 

For example, Mr. Prashant Sharma is 28 years old investing a monthly SIP amount of 10000 INR. 

 

Retirement corpus – SIP

Name – Mr. Prashant Sharma

Age – 28 Years

Monthly SIP Amount – Rs 10,000/-

Retirement Age – 55

Assumed return – 12%*

 

Retirement Corpus

Rs. 2,16,23,129

*Assumed return is only for the illustrative purpose and not to be considered as

a guarantee. Mutual fund investments are subject to market risk please read all

scheme-related documents carefully before investing.

 

Monthly Withdrawal – SWP

Retirement Corpus – Rs. 2,16,23,129

Return expected from debt MF – 6%*

Monthly withdrawal

Rs. 1,08,116

*Assumed return is only for the illustrative purpose and not to be considered as a

guarantee. Mutual fund investments are subject to market risk please read all scheme-related documents carefully before investing.

 

Your pension system

By investing Rs 10000/- monthly

starting from Age 28, Prashant can create his own ‘pension like’ the monthly withdrawal of

Rs. 1,08,116 after retirement.

 

*Return from Equity fund is assumed as 12% p.a. and from debt fund for

SWP 6% p.a. is considered.

Mutual fund investments are subject to market risk please read all scheme related

documents carefully before investing.

 

Furthermore, one can choose ‘guaranteed pension plans’ to achieve the desired retirement corpus through small and regular premiums. They are flexible and thus let you choose an investment theme that can be aggressive or balanced or conservative based on your risk appetite. It is to be noted that apart from the benefits, these pension plans often offer you life cover. They are a steady source of income after retirement and ensure a financially independent life. Adding another striking feature, they are also subjected to tax exemptions under the income tax act. 

 

        4. Opt for health insurance that suits your needs 

With age health issues are bound to arise, which means your medical expenses will end up exhausting your savings. So, subscribing to a health insurance plan is an important part of your retirement planning. This, in turn, helps to reduce the cost of living and lets you live a better and comfortable life. 

Today there are a plethora of health insurance products offered in the market. With the help of thorough research, opt for a comprehensive health insurance plan that caters to the entire family’s medical needs. 

 

       5. Re-visualise and re-plan 

It is always advised to revisualise your post-retirement life every two to three years. This helps you to determine your vision and realign your investments with the current vision. Also, it is always good to evaluate the growth of your retirement savings over the years and keep a track of the same. 

On the concluding note, your retirement deserves the best payoff for the years of your hard work. To ensure this, proper retirement planning beforehand can never go wrong and will prove to be beneficial in the long run. At Khasnis Prime Wealth, we understand your needs and align your retirement planning with your vision by recommending your customized plans.