Retirement Planning

Benefits of Retirement Plans:

Benefit from the power of compounding:

The earlier you invest in a retirement plan, the longer your money gets to grow. Also, the interest earned over time gets re-invested to generate more returns. This is called the power of compounding. This provides you with a larger amount for your retirement.

Safety net from unexpected events:

Retirement plans ensure that you are financially prepared in case of an emergency. They also provide financial support in cases of critical illness or permanent disability due to an accident.

How much do I need to save for retirement?

When you retire, your regular income stops. However, even during retirement, you would want to maintain your existing lifestyle and be able to support your family. In addition, there could be increased medical expenses. Hence, it is important to calculate your financial requirements for retirement so that you can be prepared well in advance. It is difficult to determine the exact amount you will require post-retirement; however, below are a few factors that you can consider to arrive at the amount.

Your day-to-day expenses

It will give you an understanding of how much you would need to maintain your current lifestyle even after retirement.

Events and milestones during retirement

There could be financial responsibilities even during retirement, such as paying for children’s higher education, weddings, and more. It is important to include these costs while planning for retirement.

Your post-retirement dreams

You may have dreams that you would want to fulfil post-retirement, such as travelling, starting your own venture, and more. These would require a significant amount, and hence, it is necessary to include them while calculating the amount you would need during your retirement.

Unforeseen costs

While planning for retirement, you should keep some amount aside for any uncertainty, such as medical expenses or any financial emergency.