Published on Wednesday, Jul 16, 2008
Mention retirement and mellow dreams of long morning walks, lazing in the armchair, pottering in the garden and playing with grandchildren float before our eyes. No more putting up with a nasty boss or rushing to meet deadlines. But, come retirement time and reality strikes. Giving up work can really hurt – not only is there nothing to do, but no steady flow of income either. And, with bills to be paid, finances become a real crunch.
Can you afford to retire?
Sadly, most young workers live for the day and never spare a thought for retirement; it’s always a ‘long way off’. But time flies and sooner or later, everybody will have to hang up the work boots with almost nothing in the kitty to sustain daily life. And, with longer life spans, they just end up as a burden to the family, irritable and frustrated to boot.
Writer H.W.Lewis’ famous words ring true, ‘Those who are unwilling to invest in the future haven’t earned one!’
Simply put, everyone needs to think about the future…today! Plan wisely in your working life by saving sensibly and adequately for the not-so-distant retirement. After all, just a little bit going into investment and savings now will result in much more later.
Future ‘wise’
Retirement planning is nothing but a conscious effort to plan now so that you may not only retire when you want to (or even have to), but also do so with sufficient funds to maintain your lifestyle. Here are a few tips on how to start planning your finances:
Where you are now – Evaluate your exact financial standing to get a clear picture of where you stand right now. Take an inventory what you own – home, car, bank deposits, shares, life insurance, jewellery and other assets. Take into account your current level of income and expected raises.
Where you want to go – Establish your goals by defining your retirement expectations. Decide when you want to be able to retire and how you want to end up by then. Put a price tag on your requirements – leisure expenses, medical costs and the like after factoring in the requisite inflation.
How to get there – Once you know what you want to retire with, start assiduously working towards it as soon as possible. There are a variety of sound and simple tools available, you have to choose the best ones suitable to your goals and formulate a plan accordingly.
Companies host Employee Provident Fund schemes where you deposit part of your salary with matching contributions by the employer.
You can withdraw a lump sum plus accrued interest either when you retire or leave the organisation (optional). If provided, you can even opt for a Variable Provident Fund wherein you can allocate an increased percentage of your basic pay to be deposited in the fund every month, but the employer does not match that contribution. While pension plans are available only to government employees, private sector employees can opt for pension funds with private insurers.
Life insurance companies are offering Unit Linked Insurance Plans (ULIPs) where you can insure your life for a specific amount and the money is invested in stocks and government securities. This way you receive a big amount on retirement and assured income later on. Keep in mind that you will need health care in your twilight years and invest in medical insurance schemes accordingly.
Recognise potential risks before falling headlong for the lure of shares and mutual finds. One blunder and you can lose a lot of money.
Generally, it is advisable to contribute to long-term investments in low risk, high security avenues, e.g. fixed deposits, bonds, capital protection mutual fund plans etc. and not into equities.
Build a comprehensive and coordinated retirement plan that has the right mix of different assets and risk management.
Whatever financial instruments you choose, study them carefully to understand where you will stand at various stages. You can even employ the services of a financial planner to review, clarify and update your investments.
Also remember that it takes a great deal of discipline, patience and common sense to be able to build a comfortable nest egg for retirement.
You cannot skip your monthly saving in favour of the latest cell phone or dip into the savings for that dream car!
Sacrificing a little now and saving for tomorrow will ensure a regular and stable monthly income in your golden years.
Not only does it make retirement a stress-free time of relaxation, reward and comfort, but also opens up possibilities - start a business you always dreamt of or do voluntary work that you always wanted to – without having to worry about financial security.
In short, as a self-sufficient and independent retiree, you can achieve a happy retired life that you desire on your pace and at your leisure.
Can you afford to retire?
Sadly, most young workers live for the day and never spare a thought for retirement; it’s always a ‘long way off’. But time flies and sooner or later, everybody will have to hang up the work boots with almost nothing in the kitty to sustain daily life. And, with longer life spans, they just end up as a burden to the family, irritable and frustrated to boot.
Writer H.W.Lewis’ famous words ring true, ‘Those who are unwilling to invest in the future haven’t earned one!’
Simply put, everyone needs to think about the future…today! Plan wisely in your working life by saving sensibly and adequately for the not-so-distant retirement. After all, just a little bit going into investment and savings now will result in much more later.
Future ‘wise’
Retirement planning is nothing but a conscious effort to plan now so that you may not only retire when you want to (or even have to), but also do so with sufficient funds to maintain your lifestyle. Here are a few tips on how to start planning your finances:
Where you are now – Evaluate your exact financial standing to get a clear picture of where you stand right now. Take an inventory what you own – home, car, bank deposits, shares, life insurance, jewellery and other assets. Take into account your current level of income and expected raises.
Where you want to go – Establish your goals by defining your retirement expectations. Decide when you want to be able to retire and how you want to end up by then. Put a price tag on your requirements – leisure expenses, medical costs and the like after factoring in the requisite inflation.
How to get there – Once you know what you want to retire with, start assiduously working towards it as soon as possible. There are a variety of sound and simple tools available, you have to choose the best ones suitable to your goals and formulate a plan accordingly.
Companies host Employee Provident Fund schemes where you deposit part of your salary with matching contributions by the employer.
You can withdraw a lump sum plus accrued interest either when you retire or leave the organisation (optional). If provided, you can even opt for a Variable Provident Fund wherein you can allocate an increased percentage of your basic pay to be deposited in the fund every month, but the employer does not match that contribution. While pension plans are available only to government employees, private sector employees can opt for pension funds with private insurers.
Life insurance companies are offering Unit Linked Insurance Plans (ULIPs) where you can insure your life for a specific amount and the money is invested in stocks and government securities. This way you receive a big amount on retirement and assured income later on. Keep in mind that you will need health care in your twilight years and invest in medical insurance schemes accordingly.
Recognise potential risks before falling headlong for the lure of shares and mutual finds. One blunder and you can lose a lot of money.
Generally, it is advisable to contribute to long-term investments in low risk, high security avenues, e.g. fixed deposits, bonds, capital protection mutual fund plans etc. and not into equities.
Build a comprehensive and coordinated retirement plan that has the right mix of different assets and risk management.
Whatever financial instruments you choose, study them carefully to understand where you will stand at various stages. You can even employ the services of a financial planner to review, clarify and update your investments.
Also remember that it takes a great deal of discipline, patience and common sense to be able to build a comfortable nest egg for retirement.
You cannot skip your monthly saving in favour of the latest cell phone or dip into the savings for that dream car!
Sacrificing a little now and saving for tomorrow will ensure a regular and stable monthly income in your golden years.
Not only does it make retirement a stress-free time of relaxation, reward and comfort, but also opens up possibilities - start a business you always dreamt of or do voluntary work that you always wanted to – without having to worry about financial security.
In short, as a self-sufficient and independent retiree, you can achieve a happy retired life that you desire on your pace and at your leisure.
PAYAL CHANANIA
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