1. Start saving early and regularly – Saving is of course a good habit. Saving from an early age and doing it on a regular basis uses the power of compounding where money helps money grow and you will have a tidy sum when you retire. If you start saving Rs.1000 at the age of 20 and save Rs.1000 every month thereafter for 20 years (till you are 40 years old), you will have around Rs. 5,73,000 if we calculate returns at 8%. If you start saving the same from the age of 30 at 8%, at the age of 40, you will have only around Rs. 1,82,000. 10 years can make a big difference. You will have to make up for the lost time in case you have not started saving from a young age by saving more. Experts say that you should save up to 15% a year. This of course depends on your family status, income, expenses and other obligations.
2. You should have a diversified portfolio – Some of us invest only in FDs and Government securities. Some of us like to take a bet on the stock markets. It is wise to invest in a variety of assets so that changing market conditions, economic changes and financial policies will not lead to big changes in the value of our portfolio. Some of the changes will be in our favour and some might work against us. A balanced portfolio with investments in debt instruments, mutual funds and real estate which is reviewed continuously will help in building a better corpus for the sunset years.
3. Maximize your income – You should look for ways to maximize your income provided they do not compromise with your ethics and interests. You should take up challenging assignments at work so that you will have a chance to be considered for the next promotion and a bigger salary raise. You should talk to seniors at your workplace who can mentor you. You should upgrade your skills to get better jobs or better roles in your company. If you own a business, you should look for ways to expand your market, create innovative products/services to create a market and look for ways to increase your market share. You could do something to have a second stream of income like teaching during weekends etc. These smart moves can help you have enough money for the retired life.
5. Retirement planning is not only about money – Have you thought of what you will do when you retire? Retirement planning should not be only about money. You should plan your activities, your routine and set some goals for retirement. You may want to do community service for which you never got the time when you were younger. You may want to take up a game that you never got a chance to play as you were busy studying and working. You should assess your current health and work towards keeping yourself fit and fine. If you are a person who would get lonely at home, you should make an effort to build a social network that can keep you busy during retirement. This will help you be in top shape health wise and your mind will be active. You will have a lifestyle as you desire.
You are solely responsible for your financial future. You should start working towards having enough money for retirement if you have not begun already. The rules mentioned above will help you reach towards having a good retired life. We would love to know what you do to take care of your retirement.
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