The word retirement is so relieving. After working hard over the years and missing out on important moments with family and friends, retirement is one hope for every working person to spend life and quality time with people that matter the most. Not just that, but this is a golden opportunity to live your life on your own conditions and do what you love to do. Be it travelling, cooking, painting or just having a relaxed life away from the hustle and bustle of busy city life. Every person working for 8 to 10 hours a day dreams and makes a to-do list to do what he/she loves in this golden period of life.
While you plan about hobbies to pursue, places to stay, and things to learn during your retirement period, it is also crucial to think about the income source. During your working years, there is a fixed salary that you earn every month, which takes care of all the expenses. But after retirement, there is no monthly salary. Thus, it is important to create a pension source to keep you and your dependents financially stable.
Here are 3 vital rules of retirement planning that will help you to achieve all your post-retirement goals.
- Start saving at the earliest – It is very important to build a corpus for your retirement. The common question is, when should one start building wealth? The answer is the earliest is the best. It is understandable that usually, people in their 30s and 40s are in the best of their health. Thus, the thought of retirement or building wealth for the retirement period might look like a far-fetched thought. But the fact is that starting to build a retirement corpus at an early stage gives a larger span to build more wealth, and this will assure a better quality of post-retirement life.
- Invest thoughtfully – Investment is one of the most important parts of retirement planning as only savings can bring just a limited corpus. Be it the professional money manager taking your investment decisions or yourself, it is most advisable to have a balanced portfolio allocation that takes care of the risks as well as returns. Set realistic goals in terms of returns from investments and decide how much risk you are willing to take to achieve those goals.
Once you decide the expected time horizon and expenditure needs, calculate the after-tax real rate of return as that will help you to assess the feasibility of your chosen investment plan. Be it a mutual fund investment or any types of retirement plans, invest thoughtfully as it will affect the quality of your post-retirement life.
- Choose the best suitable retirement plan – Financial stability is very necessary for the post-retirement years to spend your golden time of life in peace and happiness. The only way to achieve it is by choosing the right retirement plan. Retirement plans are investment plans that are specially designed to provide you with financial stability in your post-retirement life. Once you buy a retirement plan, you contribute a certain amount towards the plan every year, in return for which you get the steady and fixed monthly income in your post-retirement period to fill the void of your monthly income. There are various types of retirement plans that offer different benefits, choose the best suitable one after proper research and analysis.