Whenever planning for retirement, it is essential to calculate the total corpus that you will need to lead a secured and stress-free post-retirement life. If one deals with retirement planning at an early stage in their life, building a commendable retirement corpus may not seem like a task in the long run. As much as it is important for people to determine the total retirement corpus they will be needed, they must also make sure that they consider investing in a retirement scheme that holds the potential to help them in long-term wealth creation.
Let us take a look at some of the golden rules which everyone must follow when planning for their retirement:
Exactly how much retirement corpus you need
As mentioned earlier, calculating the total corpus needed to lead a happy post-retirement life is essential. That’s because inflation is something that a lot of individuals do not take into consideration and feel that the amount that they need right now to take care of their monthly expenses should be enough to take care of all their monthly expenses after they retire. Inflation tends to reduce the purchasing power of your money and hence when calculating the total retirement corpus investors must also take the inflation rate into consideration.
Kick-start your investment journey early
If you start planning for retirement at an early stage in your life you will have more years in hand and the pressure will be less. For example, if you wish to build a retirement corpus of Rs. 2 crores, if you start investing at the age of 30 a monthly investment of Rs 14000 is enough for you to achieve this feat. However, if you start investing at the age of 45, assuming that you will only have 15 years in hand before you retire you will have to shell out a whopping Rs 60000 monthly to achieve that corpus. That’s almost 4 times more than what you will be investing if you start your investment journey at the age of 30. We have assumed annual returns of 8% for the above example.
Start a monthly SIP
If you are planning on building your retirement corpus with a solution-oriented mutual fund scheme like a retirement savings fund, starting a monthly SIP would make more sense. A systematic Investment Plan or SIP is an investment tool that allows investors to save and invest small, fixed sums regularly. So even if do not have a large capital to invest through SIP you still have the chance of building a commendable retirement corpus through systematic and disciplined investing. Investors can even take the help of the online SIP calculator to compute the assumed returns that they can potentially earn through their SIP investments.
Do not give up on your investments
Understand that retirement is a stage when you will be needing more money to survive than you need right now. Do not deviate from your investment journey go give up midway as it will seriously affect your long-term returns. Think of the bigger picture. Retirement means old age and old age is bound to bring in ailments and increase doctor expenses. If you stop your investments in a retirement scheme mid-way failing to build a decent corpus will only make you dependable on your children or your estranged relatives. Thus, even if you come into some financial crisis, consider decreasing your monthly investments in the retirement fund rather than just abruptly bringing them to a standstill.
