5 Simple Steps to Retirement Planning


Everyone desires to have a peaceful retirement life. But, not everyone can achieve it because they don’t plan their finances well. To avoid such a situation, start planning for your retirement at least ten years before reaching retirement age. The following tips can help you secure your retirement.

Retirement is an inevitable part of life; everyone must retire at some point. After years of toiling hard, you may look forward to living a peaceful life post-retirement. It can be an exciting phase of life where you need not worry about the various liabilities or outstanding payments. The key to living such an ideal and happy life after retirement is to plan your finances well throughout your working years and make financial arrangements that you can use in your old age.

If you are looking for the best retirement planning tips, follow the below steps, and ace the second innings of your life.

List down your expenses

You may have certain long-term financial goals that you want to achieve after you retire. It could be buying a retirement home in your favourite holiday destination, starting an organic farm, taking a world tour with your spouse. Irrespective of your aspirations, make an estimate of the expenses and list it down in the order of priority.

You can cover all the expenses one by one, by meticulously planning your finances and investing a small amount towards each goal. Your choice of investment must be in accordance with how soon you want to accomplish the goal. So, define a timeline for each purpose and invest in the retirement plan accordingly.

Set up a contingency fund

Even the best of retirement planning can get derailed due to unexpected expenses that may crop up anytime. Planning for the things you wish to accomplish in the future is much easier than planning for the unknown, like a medical emergency in the family or accident or sudden loss of a job. Such an event can deplete your years of hard-earned saving. Hence, it is paramount that you create a contingency fund to meet the emergency funds that may befall you.

Diversify your investment and don’t shy away from equity

The old age, ‘don’t keep all your eggs in the same basket,’ aptly applies to investing for retirement. Generally, most people tend to invest only in the low-risk retirement plans like bank fixed deposits, but such schemes may help you keep the funds secured but may not help you grow the funds. Also, such investments may not give you inflation-adjusted returns. Hence, you must widen your portfolio and invest in equity instruments to mitigate the effects of inflation and accelerate your money’s growth.

Start planning early

One of the golden rules for successful retirement planning is to start early. The earlier you start planning for your retirement, the more number of years you will have to allow your investments to grow. Depending on the investment choices you make, your funds may grow with a compounding effect, and you can build a larger corpus. Hence, you must treat your retirement planning with as much importance as your current financial needs and save a small amount regularly towards your retirement goal.

Avoid breaking into the investments

One of the most common reasons why people fail to build a good retirement corpus is that they cannot avoid the temptation of breaking into investments. Many youngsters tend to withdraw their pension funds when they switch jobs, instead of transferring it. Breaking into the corpus may have a significant impact in the long run, and your retirement planning may go haywire.

Final Word

Retirement planning is vital for all, it helps you secure your old age and allow you to be financially independent and live with dignity.