According to global retirement readiness survey conducted by Aegon in 2015, on an average, Indian employees are on course to be up to 30% short of the income they will need to have their ideal retirement.
Let's have a look at some common mistakes people commit while planning for retirement and how you can avoid them.
This depends on whether you want the lifestyle you have now to be maintained even in retirement. Do you want to eat out often? Go to the theatres weekly? Go on an international trip every year? Buy property? If you don’t try and picture what you want your retirement to look like, it will be hard to decide how much money you should aim to save, invest and spend.
The solution is to decide how much money you will need. Usually, around 80% of your current annual income should cover it. Use this Retirement Calculator to know the exact figure.
Ideally, you should start saving up for retirement from the very first salary you get, when you are young and do not have the burden of debts like home loans, car loans and various insurance policies. But if you have not, give yourself the gift of compounding and start now. The Employees' Provident Fund (EPF) is a safe way to save, as it saves a chunk of your salary and also generates an interest rate of close to 8.5%, marginally higher than fixed deposits. As a rule, always save at least 30% of your monthly salary.
Say a product costs Rs. 50 today. At 7% inflation annually, the product will cost Rs. 381 in 30 years’ time! It is recommended to save a few percentage points over the inflation mark to your retirement savings calculation, pre and post retirement to beat inflation. Similarly, you need to have savings and investments to fall back on in case the economy takes a downturn, due to which your real estate investments become less profitable or you get laid off from your job.
Depending on your family history and personal health situation, you have to choose the best way to plan for medical eventualities.
Ask yourself three questions:
The important thing however is that you take control of your health and never delay getting into shape. To get you started, here are some facts and figures to keep you healthy.
Fixed deposits may be a safe and reliable investment vehicle, but the interest rates for these deposits can be as low as 7-8% post tax, unlike high-return equity and balanced options like Unit Linked Insurance Plans and Mutual Funds. To get you started on the right track, we present:
It goes without saying that you shouldn't dip into your retirement fund for any other expenses, unless it is absolutely unavoidable. A smart retirement plan will go a long way in ensuring a happy and stress-free retirement for you and your family, so get started right away.
Aegon conducted a series of surveys across 15 countries and discovered that Indians are most prepared and confident of living a comfortable lifestyle after retirement.
Creating the right retirement plan is not just about being disciplined about money. How you finalize your asset allocation strategy will ultimately decide whether you will have a financially secured life after retirement. Combine prudence with flexibility to come up with the right asset allocation strategy for your future.
More and more senior citizens in India are opting for assisted living in a retirement home instead of living with their kids or living alone after retirement. Here’s a close look at how this setup works.