Importance of Retirement Planning

Importance of Retirement Planning

By Akhil Chugh

Date July 30, 2023

Retirement is more than just the end of a career; it’s a new beginning—a chance to explore, pursue passions, and cherish life’s precious moments without financial worries. However, to make the most of this chapter, a well-thought-out retirement plan is crucial.

Retirement planning is not just about setting aside money for the future; it’s about creating a roadmap that aligns with your goals, aspirations, and lifestyle choices. By starting early and being proactive in your retirement planning efforts, you can ensure a financially secure and fulfilling retirement that allows you to enjoy the fruits of your labour and make the most of your golden years.

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It is very important to realize that the normal working life of any individual is till 60 years and assuming a life expectancy of 80 years, there is no income for the rest of the life. Therefore, we need to create a sufficient retirement corpus to last for these 20-25 years to live a stress-free retirement life and make the most out of it.

Our mission at Net Brokers is to empower you with the knowledge and tools necessary to make informed decisions, so you can enjoy the retirement you’ve always envisioned. No matter what stage of life you’re in, it’s never too early or too late to start planning for a secure and fulfilling future. In today’s article, we share seven important reasons why taking the reins today can lead to a more fruitful financial future.

Benefits of Retirement Planning:

1. Rising Healthcare Expenses:

With growing age, medical expenses usually account for the largest chunk of your total expenses. And this cost is skyrocketing. The average medical inflation in India is around 12-14%, which is almost double the economic inflation in the country.

2. Protects Post-retirement Lifestyle:

Do you want to live a happy and peaceful life after your retirement – a phase when your monthly income is no longer coming into your account? The key to having a happy life post-retirement is to start investing as early as you can and have a retirement corpus in mind.  You need to plan for a target retirement corpus that shall meet all your financial needs and goals in the future so that you don’t compromise on your lifestyle or quality of life at any stage.

Retirement Planning with mutual funds
3. Rising Inflation:

With rising inflation rates, the cost of living increases over time. Retirement planning helps individuals create a corpus that takes into account inflation, ensuring that their savings retain their purchasing power during retirement.

4. Increasing Standard of Living:

We all follow a certain lifestyle and with age, it gets deeply incorporated into our daily habits. The lifestyle we lead today is because of the income we receive every month. To ensure this same standard of living post-retirement, investing in a retirement plan is necessary. That will help you with a steady income every month even after retiring.

Retirement planning
5. Increasing Life Expectancy:

Life expectancy in India is increasing every year with advancements in healthcare. Longer life means you’ll need more retirement funds saved to continue to live off. That means saving more and planning for longer. The earlier you begin, the better your chances are of having enough retirement funds to last your entire lifespan.

6. No Social Security System:

India does not have a social security system like developed countries where the elderly are taken care of by the government.

7. Zero Family Burden:

During your retirement, you shouldn’t be dependent on anyone, especially your own relatives. Having a good retirement plan will ensure that you don’t convert into a financial burden for your loved ones. If you’ve planned consciously and kept a healthy amount invested for retirement, you may have a lovely gift to give your children by adding to their wedding plans or grandchildren for their education, gifts, etc., when your time comes.

8. Flexibility to Choose Retirement Age:

Retirement planning provides individuals with the flexibility to retire when they desire, taking into account their financial goals and life circumstances. Early retirement becomes a feasible option for those who plan diligently.

Net Brokers Takeaways:

  • Never withdraw funds from your retirement corpus, before you have retired, irrespective of the financial emergency as you cannot avail of any loan from any source to fund your retirement life.
  • Review & adjust your investment portfolio regularly to earn maximum returns.
  • Have different plans for different goals such as retirement, child’s marriage, child’s education, etc. Never use funds that are intended for some specific purpose, when you need money.
  • Start your retirement planning as early as possible via monthly SIPs in equity mutual funds. Starting retirement planning early gives you an edge as with a longer investment horizon, the compound interest in your investments increases exponentially. This is the power of compounding. Equity mutual funds give returns that beat inflation over the long term and can help you accumulate a substantial enough retirement corpus to fulfil your retirement dreams.
  • Invest regularly & increase your investments every year with rising income via SIP top-ups.

We understand that retirement planning can sometimes feel overwhelming, but fear not! Our team of seasoned financial professionals is here to simplify the process, answering your questions and addressing your concerns. From understanding various retirement accounts and investment options to managing risks and maximizing your returns, we’ve got you covered.

Get in touch with us today to learn more about how you can successfully plan your retirement.

Download our mutual fund app & start investing for your long-term financial goals.     

Here’s to a bright and fulfilling retirement!