5 minsNovember 22, 2018
The World Health Organization data reveals that life expectancy over the years has increased with access to better healthcare facilities.
Therefore isn’t it time to think: ‘How long will my retirement savings last ?’
Consequently, you’ll need to plan well if you want to live a blissful retired life.
Many recent surveys suggest that Indians do consider retirement as a vital financial goal, but not all of us have a definitive plan in place. And these days, mere savings aren’t sufficient to lead a blissful retired life.
Here are six reasons why you should plan well for your retirement, irrespective of the age bracket you are in:
- To be financially independent
- The social system of joint families is changing and a new trend of nuclear families is setting in. Given that, it would be unreasonable to expect support in the future from your children. Instead it would be prudent to plan for your
golden years from now. And perhaps as a matter of esteem, you may want to continue to be financially independent.
- To meet daily expenditures
- Have you thought about what would happen if your monthly paychecks stop coming in? You will have certain necessary living expenses post-retirement too, and the absence of sufficient funds would be a nightmare.
- But with effective retirement planning, you can build a sizeable retirement corpus, which will ensure no compromise in your standard of living post-retirement.
- To counter inflation
- Inflation or price rise, as you know, erodes the purchasing power of our hard-earned money. The price you pay for your groceries, travel, and accommodation, among many others expenses will not be the same when you retire; they are
expected to rise.
- With a sound retirement plan executed efficiently, you can aim at creating an adequate retirement corpus keeping in mind inflation, life expectancy, the rate of return, etc., to counter inflation.
- For medical emergencies
- In the ageing process, one encounters many ailments which claim additional healthcare expenses. It could also be the medical expenses of your spouse or children which you may be shouldering. And with medical inflation on the rise,
this could burn a hole in your pocket.
- Now while having an optimal health insurance cover is a must, not accounting for medical needs and saving enough for them can be a grave mistake.
With prudent retirement planning, you can build your retirement corpus that’s large enough to cover yours as well as your family’s medical expenses and avoid a financial crunch in the later years of life.
- To deal with contingencies
- Life’s unpredictability can throw up adverse circumstances owing to certain unexpected events. Situations such as natural calamities, theft, fire, loss of loved ones, etc., wreak havoc emotionally and financially.
- Having a sufficient corpus to take care of such contingent events can come to your rescue. Hence, while you approach retirement, it is imperative that you have a contingency fund, during the intermediate phase of turbulence and turmoil,
so that it does not hinder your long-term goal of living a blissful retired life.
- To retire early
- One of the many aspirations most people have is to retire early and rich, check activities off their bucket list, and/or pursue hobby/s (which may or may not be monetised).
But remember that you can afford to retire early only when you…
- Follow a strict budget and are not a spendthrift
- Do not have a debt burden
- Have invested money wisely and your family is financially secured
- Have planned for your children’s future needs – education and wedding needs, or they are financial independent
- Are optimally insured
Above all, you must have a robust retirement plan and should invest enough so that you can afford to retire early.
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm known for offering unbiased and honest opinion on investing. Axis bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.