The time you retire, you'll have earned hundreds of paychecks. Now just give it a deeper thought. You had hundreds of opportunities for saving and investing for your retirement. All you had to do was to grab those opportunities.So how many cheques have you put aside for your future? None, you say? Well, there are hundreds of others 30-something Indians giving you company. Well, certainly not a thing to be proud of but at the same time you must not get perturbed. Most people in their twenties and thirties have a horde of other things on their minds like car loan repayment, or paying off that atrocious educational loan, or even their monthly house rent (which is becoming dearer by each passing day). But does that mean that you can wait until the last minute to start saving?
You Must Start Today
It's perfectly understandable that you have a lot of liabilities at the moment, but then, you should do some meticulous planning to take out a small chunk of the pie and save it for the future. In order to kickstart the planning, you should be clear about the amount of money you'll need to save (and invest). Now, to reach that figure, you'll need to estimate three important factors, which are as follows:1. Your Age of Retirement
Most people dream of calling it a day by the age of 55 but most of them end up stretching to the age of 60 and some even go as high as 65. So you should pick up 60 as a retirement age to be on a safe side. And if you feel that you still haven't saved enough by the time you hit 60, you have a buffer of another five years to fill the pot.2. Estimated Lifespan after Retirement
Well, it's harsh but then it's a reality. Death is inevitable. By the time you hit 40, you would have a fair bit of idea about how long you would live (depending on your health conditions, personal habits etc.). But you must not underestimate your lifespan for the simple reason that you would not want your bank account to run dry while you still have another 10 years to live. Generally, there'll be no harm in assuming that you'll until 90 years. This means that if you plan to retire at 60, you'll need a cash reserve big enough to last you for another 30 years.3. Annual Funds Required after Retirement
You need to do an estimation of what your post-retirement annual budget should be in order to maintain a decent lifestyle. You must keep these expenses in mind: medical care, medicines, insurance, rent, weddings of your children (if they're getting married late), travel (essential and vacations), gifts for your grandchildren, and unexpected emergencies. Now the biggest catch here is the monster called "inflation". Remember that Rs 1000 of the present times will not buy you the same things after 30 years or so.So once all the homework is done, it's time to put the plan into action. Start saving NOW. Procrastination will only make things worse for you. Here are a few handy tips:
- Scale down your lifestyle. Cut down on excesses. When you get a bonus, save it (at least a big part of it) rather than squandering it off on a luxury bash.
- Maximise your contribution to the retirement plans.
- Seek professional advice before investing in stocks, mutual funds, insurance plans etc. Don't go only by hearsay, advice from your friends and family or mere guesswork.
- Pay off credit card bills as soon as possible. Don't let them become an "albatross in the neck".
- Delay your retirement if possible.
