Retirement Planning – the what, why, and when

Retirement. A phase of life that often evokes mixed reactions. While some look forward to it, others fret about how they will be able to manage expenses during this period. Among other factors, a lot of this depends on how one has planned for retirement.

Those who have planned their finances generally await this period as they will finally be able to devote time to things that they were not able to earlier. Needless to say, it is always better to plan for one’s retirement.

Let’s understand how to go about this.

What

Planning your finances in a manner which will take care of your requirements when you have retired and are no longer earning.

Why

Several reasons. As retired individuals, one will not have any active income, but a combination of basic and discretionary expenses that they need to pay for. While regular living expenses will come down because of most loans having been paid by that age, and one no longer has child-education-related expenses, other costs such as medical are set to rise.

Apart from wanting to be financially independent, one also needs to keep a surplus aside for medical and other emergencies. 

When

As is the case with most other goals and investments linked to them, the earlier, the better. However, equally true is that one can start late rather than never. The investment horizon for retirement planning is typically the longest. Investors can take advantage of this by starting early with smaller amounts compared to deferring it for a later stage with a higher amount.

There is more to retirement planning – stay tuned for the next article.

Till then, read up more to Plan your retirement and Start an SIP today!