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Best Financial Planning Tips for Retirement: The Complete Guide

A secure retirement is a common goal of the rich, poor, businessman or employed. Planning for retirement at the right time ensures you have funds available when you stop earning and you remain financially independent in your old age.
 

Specially designed to create a retirement corpus for old age, retirement planning is thus an essential part of financial planning. Find out more about personal financial planning for retirement and how to create a retirement plan to save in a disciplined and systematic manner.
 

Why is Financial Planning for Retirement Vitally Important?


Old age has its challenges that render you unable to work. With the loss of regular income and increased medical complications, ensuring you have sufficient funds in hand is crucial. Moreover, the post-retirement period gives you ample time to fulfil old-age aspirations. So, remaining financially independent in old age allows you to remain stress-free and gives you a sense of freedom and happiness. Financial planning for retirement has also become more crucial due to the increase in life expectancy.
 

How Do I Create a Financial Plan for Retirement?
 

 

You should not start retirement planning when you are about to retire, but from the day you start earning. Retirement planning at an early age allows you to accumulate a decent wealth corpus for your old age. So, below are some financial planning tips for creating an effective retirement plan:
 

  • Analyse how you wish to spend your old age

    The first step in personal financial planning for retirement is analysing how you wish to spend your old age. This allows you to save and invest accordingly. You may wish to travel the world, start an NGO or have other aspirations. So, ensure your retirement corpus is suitable for your old-age plans.

  • Know your investment horizon

    Before starting a retirement plan, it is essential to determine the age when you wish to retire. It allows you to calculate the time remaining in retirement and save accordingly. Not only this, but you also have to calculate the years you plan to spend on the funds after retirement. It implies that if you start planning for retirement at 28, plan retirement at the age of 60 and create a corpus until the age of 90, then your investment horizon is 32 years. Considering this, you must ensure that your savings and expenses are aligned to meet expenses till the age of 90.

  •  Calculate current expenses

    After determining your investment horizon, you should calculate your daily expenses. This should include the expenses that would continue even after retirement, such as utility bills, groceries, clothing, etc. It should not involve temporary expenses like loan repayments, child education fees, etc., that usually end after retirement. It is also recommended to create a separate corpus for health-related costs as they can’t be predicted.

  • Determine your investment portfolio

    Savings are not enough for financial planning for retirement. You need to make strategic investments from your hard-earned money that allow your savings to grow over time. So, conduct extensive research and choose an investment avenue wisely that gives apt returns and secures your old age. Also, ensure to diversify your investment portfolio and avoid keeping all eggs in a single basket. You can hire a financial advisor for retirement regarding this if you lack expertise. 

  • Start at an early age

    Above all, you must consider planning for your retirement at the earliest as it allows you to create a sufficient corpus. Moreover, starting at an early age helps your investments grow over time. If you plan late for retirement, you are burdened with investing more than starting early with small savings and investments.

  • Factor in inflation

    While investing in a retirement plan, you should consider investing in assets that beat inflation. It is because inflation can decrease the real returns of your investments. So, choose investment options that generate apt returns even after years. Again, you can hire a retirement financial advisor and invest wisely for a secure financial future.

  • Do not use retirement funds

    Many people usually fail to resist using the retirement corpus while doing financial planning for retirement in India. Some emergencies require financial resources, and you might use your retirement funds during difficult times. It is also common that many people tend to spend their old age savings on a child’s marriage, education or other life goals. So, while implementing a retirement plan, you must avoid using your old age funds and create a separate fund for emergencies and other life goals.
     
Best Retirement Options in India


There are ample options available for retirement planning in India you can choose from to secure your old age. Some of the investment options for retirement planning include:

  • Stocks
  • Mutual Funds
  • Public Provident Fund (PPF)
  • Bank Fixed Deposits
  • Senior Citizen Savings Scheme (SCSS)
  • Pradhan Mantri Vaya Vandana Yojana (PMVVY)
  • RBI Floating Rate Savings Bonds
  • Government of India Bonds
  • Post Office Monthly Income Scheme
  • National Pension Scheme (NPS)

Conclusion


One of the most crucial steps towards a financially secure future is retirement planning. It makes your old age stress-free without the need to rely on your children for funds. Hence, financial planning for retirement must be your top priority while you are earning. However, using the right investment options is an essential criterion to consider. It is because the returns in old age will depend on the asset you invest in. Moreover, evaluating your risk appetite is equally essential while planning for retirement.

L&C/Advt/2022/Dec/3212 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Why is it important to create a financial plan for retirement?

A financial plan for retirement ensures that you can enjoy the golden years of your life without having to worry about finances. It also helps you stay independent, and you can maintain your current standard of living.

What are the important components of a retirement plan?

Some of the essential components of a retirement plan include your financial goals, debt management plan, budget planning, cash flow planning, estate planning, emergency funds, and insurance coverage. 

Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.