Retirement starts with a vision and comes together with a great plan, there are two ways you can plan your retirement, one is what Dilbert suggests, but if you still think you need an alternate plan go ahead and read the post.
- Start Early,Save more now
Lot of time customers ask me when should I start planning my retirement savings, the answer is now , the day you get employed you should start planning your retirement and the chief reason for that is effect called Compounding ,given below is an example if you save Rs 10000 per month how will your retirement corpus change at various rates of returns, if you manage 12 % annual rate of return, you will have a retirement corpus of 5.5 crores versus 3 crores if you just start 5 years early almost 80 % more.
2. Inflation can be a killer look at the right number
Normally all retirement planners use consumer inflation as a benchmark to calculate the corpus, now this can be troublesome in 2 ways, firstly consumer inflation might not be the right metric that will impact your cost escalation post-retirement,food inflation, inflation in old age services, inflation in health costs might impact you much more which is not accurately captured in CPI-based retail inflation the number we see around on newspapers and televisions
Secondly,long-term inflation trends are hard to predict, u never know how macroeconomics will influence long-term inflation trends , see the chart below how inflation has fared in last few years.
3. Save more as you earn more
While you can plan savings today, in general your income will rise as you grow in your career, remember the golden rule save more as you earn more
4. Set a goal
While you can keep saving for your retirement its pertinent that you
5. Have a proper draw down plan,
6. Chose your retirement corpus portfolio smartly
7. Have a great Health insurance cover
8. Have a decent life cover
9. Maintain a seperate contingency plan
10. Be disciplined