To plan one’s Retirement might not seem like an immediate issue to address, and therefore a lot of people resort to postpone even thinking about it, Retirement Planning IS one of the most important aspect that needs attention.
Retirement planning refers to the process of planning in advance for the life one would want to live after retiring. It deals with the financial independence to meet his / her lifestyle expenses, medical expenses, hobbies, goals, and dreams. This is not an inclusive list, to each its own. The idea is not to have to depend on any one for meeting any expense after Retirement and have a steady stream of income throughout.
Now, how do we plan for our Retirement, you may ask?
The best way to go about it would be to consult a Financial planner, a professional who will assist you in the process. However, I would like to give you a head start.
· Calculate you current expenses and income. Maintain records of your current income, your expenses, and savings. In this process, it would also help to differentiate between fixed and variable expenses. This provides information about how and where money is being utilized, what is and is not important and how to can management it more efficiently.
· Identify your Future needs, requirements, goals and dreams (in monetary terms of course!). Here, one needs to create a list and outline every detail from present perspective.
· Compute the gap between the current situation and future requirements. Here, while calculating the difference, is it necessary to factor in the impact of inflation.
· Fill the gap by assets creation and allocation through savings, investment and retirement products. There is a wide range of Retirement products available in the market. Please research and arrive at a decision only after completing understanding the product.
· Finally, monitor, analyze and make adjustments.
One can start the planning anytime, although it is always advised to start as early in life. The power of compounding is magical, article coming up soon!!!
Speaking of Retirement planning, a concept gaining popularity in recent times across the globe is the FIRE MOVEMENT. FIRE as in Financial Independence, Retire Early. The full form explains the basic idea, but to be able to retire early and spend life doing things what one loves like travelling, pursuing hobbies, etc., financial Independence is of utmost priority. This Financial Independence is achieved by saving and investing a higher ratio of Income, by compromising on current needs and cutting expenses and by trying to find avenues to increase the stream of income. As easy as it may sound, this requires a highly disciplined life.
To understand the calculations for estimation of corpus required to achieve Financial Independence and Retire early, stay tuned to the website.
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Thank you.
Quite informative!
Thank you!