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Always wondered how some people retire rich? Is it that they are born with a silver spoon, or are they making good money? Probably, it was none of these but a smart retirement plan!
As most people do, you must have also thought about time after retirement. Maybe you want to travel to a specific destination, build a retirement home in the mountains or nurture a farm in the countryside in your later years. Whatever it is that you want to do, to get rich and retire easily, you need to prioritise financial planning. Retiring rich is all about being wealthy enough to fulfil your goals before and after you retire. Planning for this is not restricted to improving your earning abilities but goes beyond that.
If you wish to become financially independent and be relaxed in your old age, then here’s a brief guide on how to retire rich.
Every plan starts with a goal in mind, without which the endeavor is likely to fail. Likewise, to retire rich, you need to set down your goals for retirement. Whether you want to build a fancy holiday home, start a social service, or tick items on your travel bucket list, make a list of the things you want to do post your retirement.
Once done, put down the amount of money you will need and the time you have to accumulate it. Make sure you factor in the inflation rates to get a realistic estimate. This will help you get an idea of your risk appetite and potential investment options, giving you a proper direction to fulfil your dreams.
The phrase ‘time is money’ never felt as true as it does when it comes to financial planning for life goals, including retirement. One of the common things with most people who get rich and retire easily is that they start planning from an early age. When you start planning for retirement at a young age, it benefits you in two ways.
Firstly, it gives you more time to make money and increase your wealth. For instance, beginning to save for retirement in your late 40s leaves you with hardly 10-15 years as compared to 25-30 years that you get when you start at the inception of your career. Moreover, as your earnings increase, you can save more and take advantage of compounding.
Secondly, you have a better risk appetite. This means that you can leverage market-linked investment instruments along with safe options like a systematic investment plan to gain significant returns.
Planning for retirement is not the mere accumulation of wealth to keep you comfortable in your old age. It is all about how you manage your current income to live well now, as well as after you retire.
Now that you have an idea about your goals, you need to map a monthly and yearly budget for income and expenses. Make a note of your monthly income, fixed expenses like rent, and variable expenses such as entertainment.
Also, pen down the savings done each month. This will give you an insight into your current financial health. It also helps you monitor where your money goes, so you can make use of it wisely.
Make sure you account for enough savings and investments for your retirement along with other major milestones.
Don’t let your money sit idle; instead, let it work for you and your retirement plan. Based on your age, lifestyle, and retirement objectives, you know your risk appetite. Accordingly, you can choose from the plethora of investment options to save up for when you grow old.
Typically, market-linked equity investments are considered risky. But, they carry the potential for great returns. On the other hand, debt instruments like bonds carry less risk. Assess your risk-taking capacity and pick your instruments accordingly.
Apart from the stock market, there are other options like the National Pension Scheme and Employee Provident Fund that can also be considered.
Who wouldn’t like the idea of getting income every month without having to work! A Guaranteed monthly income insurance plan (UIN-110N147V02) is a great place to invest your money to facilitate during your retirement years. They are non-linked insurance plans that carry life cover along with a savings component. You pay premiums for a certain duration. Once the policy matures, you get a guaranteed1 monthly payout similar to a salary for a certain period of time.
Guaranteed1 income plans from Tata AIA Life Insurance provide monthly income along with a life cover to secure your loved ones and fulfil your life needs, including retirement. They also provide you with rider* options such as accidental death and dismemberment and waiver of premiums to enhance your financial protection. Their lucrative features make it a must in your retirement plan. Additionally, the ease of Tata AIA pay premium and the dedicated after-sales customer support make Tata AIA Life Insurance plans a must-have in your financial portfolio.
Insurance is a necessary tool to safeguard yourself and your family against unforeseen life events. It also makes a crucial part of your retirement plan as it saves you from losing a large amount of corpus to the rising medical and healthcare costs.
A basic term plan, for instance, can protect your family from a financial crisis or in case of an unfortunate incident In addition to the lifelong cover, most plans come with rider* options to improve your protection in case you are diagnosed with critical illness or suffer disability due to an accident. Make sure you get adequate health insurance along with a life cover to prevent your savings from getting exhausted. \
Now that you know how to retire rich, it is time to start drawing a retirement plan that will enrich your golden years.
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Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, 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 do 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.
*Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.
1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry