The age might be just a number when it comes to health and creating a lifestyle, but it is not the same for some other factors that drive our lives. One is financial standing. As we age and step ahead towards the stage of retirement, the tension of how to manage the finances henceforth creeps in. Therefore, retirement planning shall be started early in life to have a smoother and comparably tension-free old age. 

To understand how we can plan for our retirement from an early age and set a road map for the same, we have come up with some tips that might help you understand how to get answers on how to plan for the retirement days of your life. 

Start with Your Retirement Goal

Setting up a goal for any age is normal, be it your old age. We all work towards some purpose or the other almost all of our life. While you are planning for your retirement, you must define a certain goal that you want to achieve at that age in your life for better clarity.

While you set a goal, keep in mind the amount of money (approximately) needed to fulfil that objective, and then set on for the journey to understand how you can save for the same. 

See Where You Stand

Financial standing is something that is taken very lightly by people across the globe. Having a sound understanding of your finances, savings, needs, wants, and expenses are necessary.

It will give you a clear note of how much you have right now and how much you can save each month for your retirement. Where you stand now and where you shall stand later by taking some actions in life must be of utmost importance when saving for retirement days is on the charts. 

Decide How You Will Save and Invest for Your Retirement

Now that your goals are set, and you have a rough graph of your financial standing, it is time to decide how you will save and invest for your retirement. 

There are some schemes and funds that the Government of India and banks provide to safeguard you in your old age and make you free of any financial tension, so you can relax and live your life to the fullest. 

Here are some ways to save and invest for your retirement.

National Pension Scheme (NPS)

If you are looking for a simple and safe way to invest your money, then this government-based scheme called the National Pension Scheme (NPS) is an ideal choice for creating a corpus for your retirement days. 

You can invest a specific amount each year, which is invested in equity, debt, or government bonds. It also helps you in getting a tax rebate of Rs. 50,000 while saving for retirement. 

Mutual Funds

The importance of investing in mutual funds cannot be overemphasized. Many prefer to invest in mutual funds through Systematic Investment Plans (SIPs) and watch their portfolio grow. 

It can possibly generate returns ranging from 12% to 20% if you remain invested for a longer term. As you age, you can always switch between funds and move from equity to debt as you approach retirement days.

Public Provident Fund                              

PPF, also known as Public Provident Fund, is a stable and dependable investment apparatus and an ideal decision for people who like to make safe investments. The long lock-in period permits your funds to develop step by step and consistently. 

You will likewise acquire tax benefits on your interest pay-out at the point when you invest in PPFs. Fifteen years is the minimum maturity period of these funds, and you can decide to broaden them by five years (at a time) if you need to.

Insurance

You want to invest in a term plan and Medical Insurance as soon as possible. The sooner you get a term plan, the better since you can partake in a higher inclusion sum at a low premium. This will reduce the financial burden on your your family in your nonappearance and allow them to continue their way of life.

Likewise, you ought to invest in a Medical Insurance plan to take care of any expenses incurred because of disease or hospitalization.

Start Saving Early for Your Retirement

It might sound off to most people but saving for your retirement early in your life is vital in the current situation. We are expected to start our Retirement planning somewhere between 25 years to 30 years of our age.

You will always hear from financial experts to begin maintaining a corpus for your retirement early in life so that you have enough to sustain in old age. Anything from 1 to 2 months of salary each year can be saved for your retirement plan if it fits your budget. 

Check and Update Your Plan Regularly

Lastly, you must keep a vivid check on your daily plans, as the times will change from now to the time you retire. 

Keep yourself updated and mend your plans accordingly. Regular checks will ensure that you do not miss on something that might give you better returns for your old age.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.