By planning for retirement, an individual ensures financial stability for those later years. As another New Year dawns on us, our guide encourages saving early while adopting an approach tailored specifically to goals, incomes, and lifestyles. Read on to understand some simple ways to ensure a hassle-free retirement life.
Key strategies for saving
- Set retirement goals: Determine the lifestyle desired post-retirement and estimate the necessary funds to sustain it. Tools like retirement calculators can refine these estimates.
- Leverage compound interest: Starting early enables small contributions to grow significantly over time, thanks to compound interest.
- Use tax-advantaged accounts: Sock away as much as possible into options like EPS, NPS, 401(k)s, IRAs and HSAs for tax advantage. These instruments offer higher than market returns and ensure that they are safe on case of market volatility.
- Ensure adequate health insurance: Health problems can drain your savings to a huge extent. Ensuring active health insurance can safeguard your well-earned assets.
Investment considerations
Diversify your portfolio with stocks, bonds and other asset classes to reduce risks. Closer to retirement, invest in less volatile assets that ensure that saving is safe from downward market moves. As you close in on retirement, move from equity to debt and similar instruments.
Saving benchmarks
According to financial experts, one should save at least 10-15% of annual income while at work. By 30 years of age, one is expected to save a sum of his annual income. Double that saving by your 40th year and ten-fold your 67th year. These are but points on a waxing scale that depend on career stability and inflation.
Flexibility and review
Regularly review and adjust your retirement plan as life circumstances or financial goals change. Economic shifts, such as inflation or rising healthcare costs, may also necessitate updates.
This proactive approach to retirement planning ensures that you’re prepared to enjoy a stress-free and financially secure retirement.
