Whether one works in the private sector or the government one, there is one thing that both will have to do at one point: Retirement Planning. And the sooner one starts to plan for retirement and put the plan into action, the better positioned they are to move stress-free into retirement. They might even be able to retire sooner!

Living stress-free, though, is just one of the many benefits of retirement planning. Hence, in this article, we are going to cover the entire gamut- from why retirement planning is essential to how to plan for retirement.

Why make retirement plans?

No matter how young or spirited one feels at heart, they will have to leave the workforce one day. And even if one were to set up a business after that so that there would be no need to retire, the reality again is: one can’t work forever. Most often, medical conditions and diagnoses take care of that.

So, when the medical bills start arriving and you aren’t in a position to work 8-12 hours every day, what acts as a savior? The retirement planning you did while you were young.

Your retirement plans not only act as a safety net for you, but also for your partner. They ensure that you live out your old age together with sufficient financial backing and the ability to fend for yourself without being entirely dependent on your children.

How to plan for retirement?

Retirement planning is a crucial financial step and challenge in anyone’s life. While starting as soon as possible is recommended, even with as little as 5-10 years, one can put the proper retirement plans in place and feel financially supported. Here’s how to do this:

Evaluate where you are

This might be a sour experience since you might realize that you are pretty unprepared to move into the retirement phase of your life.

This is why it’s so important to honestly assess your current situation and see where you are. Without this knowledge, you won’t be able to point to where you need to go and draw a map to get there. So, sit down on a weekend with a notepad and go through all your savings. Make a note of where you spend and how much you spend. Divide these into fixed and variable expenses.

Write down your income sources and how much you earn from them. Where does that income go? How much goes into savings and how much as expenditure? Note it all down. By the end of this exercise, you should have a clear view of what your current financial standing is.

Set money retirement goals

Not vague statements like ‘I want to retire in the next few years with a few lakhs in my bank account.’

Remember: clarity begets clarity. There is no shame in accurately vocalizing your goals and dreams. If you do not do that, how else will you be able to know whether they are realistic or not?

Do you want to downsize and live in a quiet, little-known town? Or do you want to travel extensively and that, too, to foreign locations?

Write down exactly how much money you want to retire with and by when. Estimate the monthly budget for food, housing, dining out, and leisure activities. Be sure to include an emergency fund to be used during times of illness. This will include the doctor’s fee and prescriptions.

In addition to money, also include how much property you want to own and any insurance policies you want to be availing.

Set time retirement goals

Do you want to retire early or a little later? Are you in healthy shape? If yes, for how long can you absolutely and positively work?

Also, keep in mind that early retirement means you’ll need a retirement fund that will need to last longer. A good retirement date can be determined by considering when one will have saved enough so they don’t run out of money during their retirement period.

Reality check and take action

Now, it is time to compare where you are and where you want to go.

Evaluate: if you keep earning, spending, and saving as you do now, when will you hit your retirement goal? Chances are: a lot later or never.

So, begin making cuts to your expenses and start saving more. In addition, look for ways to increase your income. If you do not want to cut down anywhere, then get a part-time or freelance gig and save the entire amount that comes from there.

Slowly and steadily begin taking steps to buy the property and the insurance policies you want; depending on your unique goals and needs, they would be crucial.

Most importantly: start paying off any debt as soon as possible. Debts turn into liabilities soon and you don’t want to leave any hanging for your retirement phase. In fact, all your debts should be cleared 5-10 years before retirement so that the latter years can be focused on saving as much as possible.

Consult a financial advisor

Another helpful step is to do the above steps for retirement planning with a financial advisor and compare the conclusions drawn.

Based on their experience and knowledge, an advisor will be able to tell whether the goals you have set are realistic or not and where you’ll need to invest and save in order to reach your goals.

Be patient and adjust

This is life and the best-laid plans can be waylaid due to unpredictable circumstances. Hence, instead of coming up with a plan and following it to the T, keep your mind open for new possibilities and new feedback.

Maybe you start a side business that does take off and you find yourself ‘retiring’ from a job way earlier than you planned. Maybe you and your wife shift to live on a tropical island as digital nomads. Maybe burnout causes you to leave your job and have no fixed home.

Despite the changes that happen or the ones you initiate, be flexible, adjust, and continue fine-tuning your plan at each step.

In conclusion: retirement planning doesn’t have to be a chore. It can be a wonderful experience as you plan for a new phase of your life. With the right approach, the right mindset, and patient research, you can exit the workforce feeling ready and secure to embark on the next adventure of your life. Isn’t that something to aspire for?

 

AN Feb 86/20

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