Portfolio : A collection of investments owned by the same individual or organization.
Will : legal declaration of how a person wish his/her possession to be disposed after their death
Fund : An amount of money saved or collected for a particular purpose
Return : Profit or loss derived from an investment
A set of assets which an investor holds. This may contain equities, mutual funds, insurance and other cash equivalents.
It is the raise in the value of Consumer Price Index. That is the rate of increase of the price of a goods or services.
Do you know, according to the survey conducted by HSBC, as high as 77% of Indians believe that their children will take care of them after their retirement?
Previously, the Indian government used to take care of the pensions of all their employees.
Now, the government is also considering to shut down its pension scheme. So, it’s a high time for you to start planning for your retirement, no matter in which sector you are working now: Government or Private! Retirement Planning is inevitable.
Do you really need to plan your retirement? Take this Quiz!
Let us answer this small questionnaire which most of the people are not mindful about their retirement:
1. How much money do you need per month (or) per year, when you retire?
2. What kind of Investment Strategy do you need to achieve your required retirement income?
3. Do you know, how to deal with your loans during your retirement?
4. Do you know how to revamp your existing investment portfolio after your retirement? And, what is the most effective way to do it?
5. Since health becomes a major issue in old age. Do you have a good idea about your suitable medical insurance scheme after your retirement?
6. Do you have an effective tax planning strategy after your retirement?
If you have an answer to all of the above questions then you don’t really need to plan your retirement.
But, if you are not aware or unclear about at least 3 questions above, then it is the right time for you to consider implementing your Retirement Planning.
Top 10 reasons why people are in a trap of ‘magical thinking’ of not planning for Retirement
People consciously believe that Retirement Planning is a necessary investment to do. But there are some inner thoughts that lead people to fall in the trap of Unplanned retirement:
1. My children will take care of me after my retirement…
Times are changing. Nowadays people prefer to live in a nuclear family. They have the responsibility of their own and their family, such as kid’s education, health-care, their personal financial planning and so on!!
It is always recommended to plan your own retired life by creating a customised retirement plan suitable for you.
2. I’ll inherit enough money…
People are emotional about inherited properties, as they come as a result of the loss of loved ones. Relying on inheritance is risky due to 3 major limitations:
- The market value of the inherited property may get depreciated over time.
- Additional liability of repair and maintenance of the property.
- If the inherited property is supposed to be distributed, it may lead to unending disputes at the court level.
3. I believe in my business profits…
You put significant efforts to grow your business, believing that it will take care of you in the future. You assume that it may require little of your effort in your old age.
But trends and technologies are changing all the time. Your business might not yield your expectations. There are always unexpected ups and downs in the business world.
Therefore it is a wise idea to plan your retirement while growing your business. You can take advantage of the retirement plan for small business owners and build your retirement savings as you grow your business.
4. I’ll save once I have enough…
It’s never going to be enough to SAVE money. Saving requires discipline and major adjustment in lifestyle. Small saving now has a bigger impact as compared to saving a lot, years later.
So it is always recommended to keep ‘Saving’ as the first priority with a great sense of urgency.
As the investments grow over the period of time, then the power of compounding works like magic.
5. I’ll get money SOMEHOW, after my retirement. I’m sure of some BIG surprise…
There is a popular saying among people that “Universe will provide!”. This thought is soothing to have, but you need to take relevant actions to meet your desired expectations.
The universe only responds to diligently taken actions. It doesn’t respond to wishful thinking or common expectations.
And, the right action to take is to decide the kind of lifestyle you would like to have post-retirement. And, there is always the right retirement plan suitable for you to achieve your post-retirement lifestyle goal.
6. I don’t actually want to THINK about it…
Thinking about old age and finances is unappealing to most people, so they procrastinate. This thought is understandable… Thoughts about retirement or old age don’t fit well with people’s emotions on money and finances.
But understand this, living a good financial life requires a good deal of planning in advance. With better awareness about your desired lifestyle, you will be able to plan all your necessary finances, whether they are related to an exciting trip abroad or a plan for life post-retirement.
7. I have no Idea, HOW to plan for retirement???
Where there is a ‘will’ there is a way. Stronger the will, better ways will be shown up. The very first step to plan a retirement is to define a post-retirement income number. You can use this Retirement Planning Calculator, to get a good estimate on arriving your income number.
Also, for more information, you can read this comprehensive article on How to invest in retirement corpus?
8. I think it’s TOO late now…
It is never too late!
The time you realize the importance of retirement planning is maybe close to your retirement age or you might be already retired by now. Even in such cases, not planning for the upcoming years will be an expensive deal for you in the long run.
In such cases, if you are unsure, it is recommended to take advise from a professional. It is never too late to revise your income distribution strategy.
9. I feel the retirement planning is a NEEDLESS task!!!
A new finding from NFCS (National Financial Capability Study) reveals that the basic financial literacy has not moved forward – and it can derail retirement planning, as well. Hardly 33% of the population has a basic understanding of risk diversification, interest compounding, and inflation.
If the majority of people are not aware of basic financial literacy, then how they will ever feel the NEED for retirement planning and the associated benefits with the personalized retirement plan.
Unless we act, we face an insecure future.
It’s time to start taking a useful decision regarding all essential financial planning tasks, including retirement planning.
10. I feel it’s TOO early to plan now…
It is never too early to plan for retirement.
It's often difficult for us to clearly picture where we'll find ourselves in five to ten years. And, retirement seems too far in early ages. There is a common notion among people that you don’t need to plan for retirement until you are almost there.
But, time always slips fast.
Unplanned life is easy to pass by, whereas to live a planned life, it requires significant efforts and these efforts always pays off well.
A penny under right investment can literally turn into crores through the power of compounding!!
Most people start saving in their early 20s and reap highest benefits.
The truth is, the sooner you start your retirement planning, the better chance you will have of living your dream retirement.
How to recover from Unplanned Retirement
1. Start saving NOW!
Even if you are not sure about your specific income number yet. You must start saving 10% of your income or whatever you possibly can.
Saving is KEY!
To go from the habit of virtually saving nothing to the new habit of saving diligently requires a lot of discipline and some major lifestyle adjustments. But this level of commitment is required to live your dream retirement.
If you have a regular job, then 12% of your basic salary and an equal contribution by your employer that flows into your Provident Fund account is a good way to build your nest egg. It is a compulsory saving which becomes a default retirement plan for many working individuals.
Whatever the case, you have to ensure maximum saving that you are able to make per month for a better retirement.
If you delay in planning, more you will need to save. But, if you start planning earlier, you will reap the best returns and benefits even with small investments.
2. Retire LATE!
Postponing the retirement and continuing to work is the most effective way to boost your post-career standard of living, it is even more helpful than increasing your rate of saving.
- Retiring late will keep you engaged and you can avoid decade long boredom due to no work.
- Later you retire, more benefits you can have of Compound Interest. As you work longer, you can add to your retirement savings, the more time they have to grow, the less you need at the time you eventually retire.
- Later you retire the more tax advantages and the more benefits of senior citizen schemes you will be able to utilize.
3. Be flexible and resourceful in your Retirement Planning!
If you are too late in retirement planning or fallen behind in your efforts of retirement planning, it is still possible to leverage various ways to plan your retirement in an effective manner:
- You can downsize the equity sum of your home and save for your retirement. Instead of buying an expensive home in big cities, you can get an inexpensive home in your native place. But, retirement planning can’t be compromised.
- Don’t let your age hold yourself back in considering part-time jobs. Nowadays, part-time jobs are gaining more popularity.
Such aspects will open up additional streams of income for you and through proper planning, you will have your dream retirement.
4. Plan your retirement while growing your business!
Instead of relying on business profits as your regular income or retirement saving. It is a wise idea to set-aside your own salary from your business on a monthly basis, where you can plan all your expenses and save for retirement planning as well.
Above points can allow you to WIN yourself and start retirement planning at the earliest. Money is an essential ingredient, it can make or break the person based on their PLAN and VISION of the future.
People with plan succeeds and people who are confused about planning, dwell in confusion. And prolonged confusion leads to a BIG failure. Don’t let any bit of unplanning happen in your life, especially the post-retirement life.
We at Holistic have a perfect personalized plan for your retirement. You can book your consultation call with us, by clicking the link below: