Retirement Planning

Published by Mr. Mukesh Gupta at October 14, 2021

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“Retirement is like an iceberg, where 90% of what’s really taking place lies below the surface, absent from traditional financial plans and conversations”

Thoughts about retirement are no doubt fairy tale thoughts for some of us. Afternoon nap, morning tea with newspaper in hand- no doubt sounds dreamlike for most of us who spend most of our years in earning and struggling to financially provide to our spouses, kids and our aging parents.

Retirement is entirely different phase for us – both mentally and financially

For most of the part of our life’s journey we are either dependent on our parents for financial needs and for most of the other part we are earning ourselves.

However, after retirement there are no earnings.

What is Retirement Planning?

Retirement is no doubt the important phase in one’s life. However, we hardly give planning for the same any importance.

Retirement planning is estimating your post retirement expenses beforehand – long before you actually retire, adjusting the same to inflation, arriving at the corpus required and finally planning your investments accordingly.

Sounds difficult?

Indeed, it is!

However, with proper planning even this can be achieved!

How to work out your retirement plan?

Calculating the corpus: Sooner the better!

The best time to start investing for retirement was few years back. The second-best time is now.

Whatever your age group is you can start investing and accumulating your corpus. The younger you are the risky and high interest earning your investments can be.

Look at the following table:

Assumptions:

Expected retirement age	60
Monthly expenses for current lifestyle	Rs. 30,000
Expected Inflation	5%
Expected pre-retirement return	12%
Expected post retirement return	7%
Life Expectancy	90 years

Age (in years)	Corpus to achieved at the age of 60	Monthly investment required
25	₹ 4,59,20,392	₹ 7,141
30	₹ 3,59,79,829	₹ 10,295
35	₹ 2,81,91,137	₹ 15,004
40	₹ 2,20,88,494	₹ 22,328

Pathway to your retirement

Early stage of career

If you just taken baby steps in path of financial freedom, then perhaps creating a strong financial foundation is of utmost importance.

If at this stage, retirement is on your mind, then the following is advised:

Create a spending plan
Build an emergency fund
Pay off debt (student loans, credit card dues )
Start an sip for retirement

Mid- Career – 10 to 16 years for retirement

In the retirement timeline, at this stage, you have good 10-16 years to retire.

Following is what you should do at this stage:

Check retirement path progress. Whether you are on the right path or not. Cross check it with the numbers

Adjust your retirement funds. Reduce your equity allocation and look for less volatile options for investment.

Late Career – 5-6 years for retirement

Evaluate income sources
Analyse how and from where you will receive income from existing investments post retirement.
Reduce the equity exposure to 0
Most importantly, decide, when exactly do you plan to retire

Post Retirement

Structure your leisure time
Re adjust your adjustments
Make a will

Retirement Planning