“It’s never too early to begin planning for retirement.”
Just like there are signposts on highways to help us navigate on our path, when it comes to our happy retirement, there are certain signs that indicate where we are in our journey.
Today, we urge you to check your status among some important signposts and determine where you are in your personal journey toward a peaceful retirement.
Here are four signs to measure how you are progressing and whether or not you are on the right track:
- 1. You are Aware of Your Retirement Corpus
Having realistic expectations about post-retirement life, especially knowing the expenses, will help you identify the required size of your retirement corpus. In most cases, the annual spending of 70 to 80 percent of what you spent previously is considered to be enough. However, one must not ignore home loans as well as inflation in the process.
Let’s say, you are 30-years-old and wish to retire at 60. If you currently spend Rs. 30,000 per month to meet your expenses, considering an inflation rate of 6 percent, you will need approximately Rs. 1.72 lakhs to meet your monthly expenses after 30 years. Therefore, ignoring inflation will lead you to arrive at a much lesser amount than what you will need.
Once you know your expenses after retirement, you can calculate the total retirement corpus using retirement calculators. You just need to enter the details of your current expenses and get an approximate figure of how much you need to save for retirement.
Those of you who already know their retirement corpus, are on the right path!
- 2. You Have Eliminated All Your Loans and Debts
Eliminating debt should be one of your foremost priorities on your retirement journey. Therefore, to start with, reduce your dependency on credit cards. Once this is achieved, work through your debt obligations in sequence - pay off highest interest loans first.
Remember that you will be well on your way to a happy retirement only when you are “debt free”. Therefore, create a plan to eliminate debt as early as possible.
- 3. You Have Invested in Pension Funds
Without reliable income in retirement, you can never account for your retirement goals, emergencies, health problems and more. The good news is that there are many financial products to ensure that you can live comfortably in your golden years. Most notably, pension plans are insurance products that offer guaranteed income for your post-retired life.
Therefore, once you have decided to start saving for retirement, invest in suitable investment options such as pension plans or mutual fund retirement plans.
Investing in a pensions plan can provide you with many significant advantages to make your savings grow more rapidly. In pension funds, insurers like Max Life Insurance invest your regular contributions so that they grow throughout your career and provide you with an income during your retirement. When you invest in the best pension plan, you are primarily investing in a long-term savings plan that provides tax benefits too.
Investing in pension plans early in life can benefit you as you will be able to reap compounding benefits for a longer time, therefore, accumulating a larger corpus.
- 4. You Have Health Insurance in Place
In spite of having all the above factors are in place, a serious health issue can topple your retirement plan entirely. In such a case, having a good health insurance policy can pay for any unexpected medical emergencies in the future, without requiring you to dip into your retirement savings.
Therefore, purchase a comprehensive health insurance policy that can meet the high treatment costs of critical illnesses, including cancer and heart diseases.
What If You're Not On Track?
In case you have already accomplished each of the tasks mentioned above, congratulations! You can now enjoy a comfortable and pleasant retirement.
However, if you have missed one or more of these steps, you can still make a course correction. For instance, if your retirement saving money is sitting idle in your bank’s savings account, you can opt to invest it in the best pension plan immediately. All you need to do is act instantly and correct any issue with your retirement plan.
Always remember: The sooner you start, the easier it will be to get back on track!