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Retirement Planning tips for Late Starters​​​​​

When you were a kid, did you ever have a piggy bank of your own? The heavier the bank became with coins, the prouder we felt. The value of the coins was probably minuscule, but the message behind it was large – to inculcate in us the habit of saving. We have always known that the early bird catches the worm, and so if you save early, you can stare at a reasonably comfortable life in your twilight years. But sometimes, things don’t pan out the way we planned. And if you missed catching the retirement planning bus when you were supposed to, fret not. All is not over, and there are still some retirement planning tips you can follow to build up a nest egg with the resources and time that you have.

What is Retirement Planning?

Retirement planning is allocating a certain portion of your monthly income during your earning years, specifically for your retirement. When you stop earning, you still have expenses and a lifestyle you want to maintain, and the corpus you gradually build over the years will help you achieve that.  

Top Retirement Planning Tips for Late Starters

Realistic goals:

One of the first retirement planning tips is to figure out how much savings you will require for your retirement. Please note that the strategies applicable if you had begun saving 10-15 years back may no longer hold weight later. Hence, if you have a reasonable target, it becomes easier to figure out how much you need to save to reach your goal.

Evaluate existing investments:

Before going ahead and investing in any retirement schemes, you need to evaluate your existing investments and expenses. You might have invested in equities in the past or in many traditional investment instruments. Next, determine your monthly budget for expenses such as clothing, utilities, housing maintenance and so on. You may also add inflation to your estimates. Knowing your current circumstances will provide a clearer picture of what you need to do in the coming years for your retirement.

Be well within your limits:

It is important to understand your limits before you decide the course you want to take for ​retirement planning. Your risk appetite and investment goals will depend on your age, income, and existing liabilities, and you will need to devise your strategy accordingly.

Clear all debts:

Interest payments on debt eat away into your income and can significantly reduce your retirement corpus. Hence, it is crucial to clear all your debts to the extent possible so their burden is not felt in your retirement years.

Cut down expenses:

We live in an age when medical advancements have significantly increased our life expectancies. So, you may need to cut down on unnecessary expenses to save a sizeable portion of your savings for healthcare bills.

To conclude…

Ideally, retirement planning needs to begin at an early age, but it does not mean that all hope is lost for late starters. If you are aware of your limits, your risk appetite and financial goals, then you can still build a good enough retirement corpus in your golden years.

FAQs

When should I start planning for retirement?

You should start planning for your retirement as soon as you have begun earning by setting aside some portion of your monthly income for your retired years.  

What are some common retirement planning tips?

You can start with figuring out how much money you will need to live on each month. Evaluate your current investments, savings, and risk appetite to determine where you are now so that you can plan your retirement budget accordingly.

How much money do I need to save for retirement?

The amount of money you need to save for retirement will depend a lot on your income when you begin saving, your risk appetite, and your financial goals.

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