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Is my Retirement on Track? Three Signs that Indicate You are on Track with Retirement Planning

23-08-2022 |

Retirement is the golden period of your life. However, you can live a secure retired life only when you have a significant corpus to sustain your expenses during retirement. Therefore, the most important question to ask yourself before you consider taking retirement is – am I on track for retirement?

 

To be sure that you are ready to transition from working life to a non-working one, analyze if your retirement planning is failproof. Retirement readiness measures how equipped you are to effectively live the golden years of your life. Generally, your retirement readiness estimates your financial preparedness and the degree to which you can support your present standard of living even during retirement.

 

Even though your retirement readiness is uniquely dependent on your situation, here are three signs that indicate you are on track with retirement planning:

 

 

  • Significant retirement nest egg: 

    The first way for you to know if your retirement on track is by judging your retirement corpus. Your retirement nest egg should be sufficient to cover all your needs during the non-working years of your life. For this purpose, your retirement planning must be failproof, and you should precisely know how much you will need for a financially secure retirement.

    As per experts, your retirement income should be at least 70-80% of your current monthly earning. So, if you earn Rs. 85,000 per month presently, you will at least require Rs. 59,500 and Rs. 68,000 per month during retirement. However, if you expect your expenses to be higher because of your aspirations, like travel, etc., you will need to replace nearly 100% (or more) of your current income.

    Further, this calculation does not account for your emergency corpus or healthcare expenses, which are expected to consume a big bite of your retirement income. Your emergency corpus should constitute at least three months of your living expenses. Your healthcare expenses will rise with age, and hence, you should also make sure that your retirement corpus is sufficient to cover your medical expenses. Ideally, you should save in a comprehensive insurance cover that can pay for the rising medical expenses during the later years of your life. You should create your retirement nest egg, keeping in mind the rising inflation and consumer prices.


  • Balanced portfolio management:

    Another major retirement planning constituent is a balanced investment portfolio. If you wish to retire early or even at your official retirement age, it is important to have a stable source of earning during retirement.

    Your retirement investment portfolio should be diversified and aligned with your retirement goals. Your retirement portfolio should comprise high-earning securities as well as low-risk and moderate securities. For instance, it is important to have equity-based or other market-linked instruments such as mutual funds, etc., in your portfolio.



    Saving solutions from TATA AIA online give you the dual benefit of insurance and reliable income. The insurance cover helps to secure the future of your loved ones.

    Adding a savings plan such as Tata AIA Life Insurance Fortune Guarantee Plus (UIN: 110N158V01) to your retirement portfolio can help you build a robust savings plan for the future. With guaranteed1 regular income to aid your retirement lifestyle, you can choose to receive the income benefits for up to 45 years!

    Also, by selecting the regular income with in-built critical illness cover, you can also ensure that your savings are not disrupted in case a critical illness strikes.

    That said, as you near your retirement age, your portfolio should also be modified as per your risk tolerance and life stage. When you are far from retirement, you can take more risk and opt for riskier assets in your portfolio. However, as you near your retirement age, your risk tolerance reduces. You would need to adapt your investment portfolio to include safer investments options.


  •  Freedom from debt: 

    One of the most critical signs that indicate that you are ready to retire is when you are free from debt. Debts are complicated and often hamper your financial security in the long run. Moreover, if you have debt, your retirement could be spent paying off your financial loans.

    Hence, you should think of retiring only when you have paid off your debts or have a concrete plan to pay off your liabilities. Further, reduce your dependency on credit cards as you come closer to your retirement.

 

Apart from assessing your retirement readiness on the above-mentioned factors, you should also set aside a sum to pursue your passion during retirement. While saving for retirement, you would have slogged for hours and worked through weekends and amidst project deadlines to ensure you earn well and save a large amount for retirement. Hence, retirement is the only time you must chase your passion and fulfil your heart’s desires. You could go travelling, scuba diving, write a book and more. So, before you retire, you should have a concrete plan on how to finance your passion.

 

To ensure your comfort during the non-working years of your life, it is wiser to use the above parameters to know how well-prepared you are for retirement. Failproof retirement planning is the only way to live a happy and financially secure retired life.


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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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Disclaimers:

  • 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.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry