After one point, everyone’s working career comes to an end. Most of us naturally envision that when we step into the retirement phase, we will be in a financially comfortable position to enjoy the joys of our golden days. But of course, in order for this to manifest as we have imagined needs careful planning and execution. Years of persistence may go in this accomplishment but in the end, it will really be worth it & allow you to savour your glorious days with ease and abundance.

Let’s take a look at some pointers that can help smooth the process for you. Read on…

Retirement investments takes into account your financial goals, income, spending and savings. Spend some good time in understanding where you stand currently, where you’d like to be and what best you can do to get from here to there. You could even consider implementing on the recommendations of a retirement planner to estimate your nest eggamount and investment alternatives.

Starting Early: Retirement is reality for every working professional and the earlier one accepts this, the better. Especially in a country like India which does not have a social security net unlike developed nations such as the US and UK; it is imperative to start young. According to an August 2011 release from the Social Security Administration, Social Security accounts for at least 50% of the retirement income of two-thirds of Americans age 65 and older.

With the power of compounding, you can begin with a small saving amount that can easily be saved month after month. If followed consistently, one can walk away with a sizeable portion.

Start with a retirement fund that allows you to accumulate this amount – As small as Rs. 2000 a month can be considered; keep increasing the number as and when you’re comfortable or whenever your salary swells. Make sure to be consistent with this as it requires a regular outflow without which the goal cannot be attained. One may find difficulty in following this as immediate needs demand more attention but in time, it may soon become a habit.

Include expenses that are reimbursed by your organization: While getting into the details for your retirement base expenses, make sure to include expenses that are presently being reimbursed by your company. Medical and travel expenses may not have much importance now but are extremely important in life’s later stage.

Inflation Adjustments: Prices will continue rising by the time you retire and even post that. Thus, it would be a wise move to take inflation factors into account as well. You could try using the cost of living tool to evaluate how much ‘price rises’ will affect your costs after retirement.

Where should you invest for your retirement?

Mutual funds are the easiest way to riches for the small investor. A systematic investment plan is best if you choose to take this route. You could even buy direct stocks if you understand the financials of a company or know the stock market and can face its ups and downs. Public provident fund (PPF) and New Pension Scheme (NPS) are also excellent tools for retirement planning. These are long term products that are safe and especially directed towards the retreating phase. You can consider putting your money in fixed deposits and bonds, but they may not give the best returns.

Another winning avenue is investing in real estate. The property bought can generate income in the form of rentals during your retirement period. Besides being an excellent source of income, (bearing in mind that you’d stop earning post 60) this option offers security as you are the asset owner. Plus, real estate appreciates after a long period of time and proffers heaps of returns.

The common investments options to build a strong nest eggare:

·         Pension products from Insurance companies,

·         Mutual Funds

·         Post Office investments.

·         PPF (Public Provident Fund)

Investing in the following will also help:

Real Estate

Direct Stocks

SIP of equity diversified mutual funds

PPF

NPS

Avoid:

All kinds of Insurance policies

Debt other than mentioned above

Retirement planning must be looked at as an important goal and initiated early on in life. The best age would probably be 25 as by then the individual is likely to find and sustain a job. If you plan on starting at 40, which is not at all advisable, you could not only meet failures but there’d be added and unnecessary pressure too. It is best to meet a financial planner and discuss various options that suit your situation perfectly.

Being healthy as well as financially and mentally prepared for retirement is the only way you can enjoy in your later days.

Written by: Nargis Namazi