Retirement planning and the financial goals for retirement can be met and done slowly and steadily if you start young and early. To have a comfortable life after retirement and maintain the same standard of living as you maintain while you work, you should think of multiple investments and a safe fund that caters to it all. The only hack to secure your future goals and be worry free is planning. Saving is not the only way you can keep money for your future. Investing the money and growing it is the key to a solid retirement plan. There are various schemes like the National Pension Scheme(NPS), and expert SMSF accounting solutions in Gold Coast that can help you effectively manage your self-managed superannuation fund (SMSF). The online NPS calculator and PPF calculator help you know the amount to be received at maturity.
The article shares a brief about 5 major steps that you can take to plan a good retirement corpus.
The retirement fund can be easily taken care of if savings are done within a time frame and most importantly at regular intervals.
Let us briefly examine the vital factors that affect retirement planning.
- Time Horizon
Your present age is the deciding factor for your investment strategy. Your age defines the risk you can take and the amount of loss you can incur in the worst-case scenario. The longer time you have got for retirement, the riskier your portfolio can be. For younger individuals, the investment alternatives will consist of options like more stocks and fewer debt instruments, as they are riskier and have more volatility. The time horizon should be decided as early as possible by every investor. NPS and PPF are government-backed and safe avenues for investments. The NPS calculator and PPF calculator will enable you to know the returns for the investment amount.
- Considering Inflation
The secret to successful retirement planning is defeating inflation which is on the rise since the last decade. One has to outpace the effect of inflation so as to maintain the purchasing power of money at the time of retirement. Compounding money has a positive effect on investments and capital. On the other hand, inflation erodes the compounding of capital. So, while making investments, the cost of inflation should also be considered.
- Insurance and Emergency Corpus
After the pandemic hit the world, people have started realising that insurance is highly necessary and needed for all. Health insurance is a crucial necessity and one must buy it. Investing in the insurance plan may require you to pay premiums either monthly, quarterly or annually. Health insurance if bought early can save you from paying higher premiums due to any underlying medical conditions. Specific plans are present that can be purchased to take care of any diseases in the future.
An emergency corpus should always be available with you that can be liquidated easily and can be accessed anytime. This corpus should not be touched or used in any daily or routine transactions. As the income increases, the corpus of the individual should also increase that eventually leading to a systematic increase in the retirement plan automatically.
- Creating a Portfolio
Creating an investment portfolio and letting a professional manager take charge of your investments is important. No matter how much you know about investments and returns, the managers have a holistic view of these investments and thus make better decisions than us. Do not put all your eggs in one basket. Diversify and take calculated risks when it comes to investing.
- Know the future value of investments
This is one of the important aspects to be considered. It depicts what the investment amount will look like in the future after deducting the inflation and taxes for the investment. Taxes do form a major cost for investors when it comes to expenses. Tracking the investments and amending them as per the requirements will help you gain the maximum advantage of the retirement corpus.
A robust financial backup is needed when you retire. To lead a dignified and financially independent life, planning for your retirement is important. If you plan to take up social activities or start your own business, if finances are in place, it helps you to be worry-free. Use the NPS calculator and PPF calculator while you plan to invest your money.
In short, you have to have an emergency fund set aside only for the purpose of retirement, invest in growing your money, and increase wealth. It is also important to know the future value of your investments and consider the inflation part. To summarise, the earlier you start, the chances of your journey being simpler are higher. Retirement is a lovely phase that should not be lived with the stress of meeting your needs. So to look beyond money then, plan now.