Retirement is an inevitable phase of life for all of us. The day will arrive when, due to advancement in age, we can no longer take on the rigours of a daily job or business, and are relegated to a more passive lifestyle.

However, retirement should be viewed as a welcome phase in our lives, as it is the culmination of the decade-long efforts that we have put in earning for ourselves and our loved ones. It need not be stressful if you have planned well enough during your working years, and have built a meaningful, substantial corpus which can outlive you.

Remember, you can get a loan for financing your child’s education or for buying a house, but you will never get a loan for your retirement. Hence, Retirement Planning assumes great importance and is necessary, for every individual, whether you are salaried, self-employed or a businessman. The earlier you start, the better it is for you.

The following points will help you in your dreams of securing a comfortable retirement for yourselves:-

• A higher level of savings: A thumb rule of retirement is to save at least fifteen per cent (if not more) of your monthly paycheck mandatorily towards building a retirement corpus. Every increase in your salary should be matched with a commensurate rise in your monthly savings earmarked for your retirement. This will ensure that there will be both a surplus and enough money to go around during the retirement period, which on account of higher life expectancy rates, could even run into 25-30 years.
• Disciplined savings: An auto-debit from one’s salary account into a separate savings account (for retirement purposes) can be the easiest way of saving. All the investments should be made from your different savings accounts. You can easily classify money when you have one salary account and the other one as a separate dedicated bank account for investments.
• Imbibe the SIP culture: A Systematic Investment Plan (SIP) is one of the best ways to create a large corpus. Start investing regularly over a long period from an investment-focused bank account through a monthly SIP in an equity scheme. SIP helps you in three distinct ways: 1) builds financial discipline in our lives, 2) assists to average out the unit purchase cost and collect more mutual fund units with inflation-beating returns and 3) helps you to leverage the power of compounding.
• Selecting the right investments: Planning for retirement also involves a judicious mix of asset classes which can deliver better than inflation-adjusted returns. Hence, there is a need for adequate diversification in your portfolio, with a suitable blend of equity and fixed income (or debt) instruments. At the same time, investing in too many schemes, i.e. over-diversification, is also detrimental to the health of your portfolio.
• Avoiding withdrawals from retirement corpus: Make sure that your retirement corpus is left untouched for withdrawals till you retire. Investors should not get trapped into a common tendency to divert a portion of their retirement funds towards fulfilling other financial goals.

There are many unforeseen and unexpected risks associated with retirement, and you need a much bigger emergency fund to meet such risks.

There are three common risks which people fail to predict in advance –

• Longevity Risk- The average life expectancy has increased with advancements in medical care, and you may live up to 80-85 years; therefore, people retiring at the age of 60 need to keep a provision for roughly 20-25 years post-retirement. As per the latest study, 14% of people now survive until the age of 95 due to the aforesaid medical advancements. In the absence of proper planning, things can turn for the worse. People would be forced to cut down on expenses at a higher age.
• Disability & Critical Illness Risk- A pure term insurance plan only protects mortality risk. It becomes difficult to cover critical illnesses when you grow older; a single prolonged illness can wipe out an entire lifetime of savings. For many people, both kidneys functioning at an older age or vision in both eyes are not normal these days. Disability or critical illness can be prevented if you take care of your health and imbibe good habits from an early age.
• Risk of unexpectedly high inflation- An unexpected higher rate of inflation will ruin the value of your long-term portfolio. When the cost of goods and services increase faster than what you have in your savings account, the money you have will buy fewer and fewer products and services over time. When determining your annual retirement need, you must add a cost-of-living adjustment to ensure you have adequate money to buy the same amount of goods and services you require.

To summarize, retirement heralds a significant phase in your life, wherein you have more time at your disposal to pursue alternative or creative pursuits, travel to your favourite destinations, take up new hobbies or do all those things which you could not during your working life. Put a plan in place today, if not already done, and steadfastly work towards ensuring that you live comfortably in your golden years with the freedom to do what you always yearned for during your professional work life.

Founded in 2005 by new–age entrepreneur Abhishek Bansal, the Abans Group has evolved into a globally diversified conglomerate, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management. The Group is a comprehensive financial and non-financial services and solutions provider, aiming to provide end-to-end solutions to its clients.