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  • Follow these rules while planning for your retirement in 2020

    Published on February 27, 2020

    Retirement planning can be a long process. Due to its longevity, you might either lose focus or divert your mind towards other aspirations in your life. However, retirement planning should be started with the right mind-set and appropriate guidelines. If you begin your retirement planning without proper knowledge, you might have to lead a compromised or stress-free life in the future. Therefore, let’s go through the top seven rules you should follow while planning for your retirement in 2020:

    1. Save more than you require

    After retirement, the flow of your professional income might stop. Since you might not have any other source of income, you should save adequate funds to lead a secure lifestyle after retirement. Many of you might save 70% of your income regularly for your retirement period. However, you should start saving a larger proportion of your income to maintain your current standard of living during your retirement.

    1. Plan your retirement at a young age

    The primary focus of your youth might be to first build a stable career for you. Since retirement might seem miles away at a young age, you might tend to overlook the importance of retirement planning when you are young. Since you might have maximum time in your hands at a young age, the chances to build a large corpus before you retire can be relatively high.

    1. Opt for real estate investments

    Opting for real estate investments can allow you to generate a steady flow of income. When you buy a new property, you can lease it and gain income from it. With real estate, you can also use the additional income to invest separately. Moreover, you can stay ahead of inflation since the rent can increase every year.

    1. Diversify your investment portfolio

    Although investments can be a risky affair, you can save your money from the fluctuations of the market. To diversify your investment portfolio, you should look for the right investment plan that can give you the opportunity to shift between funds. Typically, a Unit Linked Insurance Plan (ULIP) can allow you to shift between equity funds and debt funds to secure your invested capital from market volatility.

    1. Choose the right retirement investment plan

    A retirement investment plan can provide you with a monthly income to meet your routine expenses such as utility bills, groceries, and so forth as well as post-retirement goals such as traveling, pursuing interesting hobbies, and so on. The right retirement investment plan can allow you to fulfil your household expenses as well as build a substantial corpus for your retirement. There are different plans such as the National Pension Scheme (NPS), Unit-linked pension plan, and so forth that offer retirement benefits for your financial security in the future.

    1. Build an emergency fund

    The unpredictability of life can be relatively high today. According to a report, 86% of people in India feel that life is uncertain. Due to the growing unpredictability, there can be unfortunate events such as physical disability, loss of income, accidental death, etc. If you do not have adequate funds to tackle such unannounced emergencies, you might deplete your retirement savings. Therefore, you should build an emergency fund at a young age to provide financial aid for such contingencies.

    1. Purchase a health plan

    When you are young, the chances of falling ill can be less. As a young adult, you might not suffer from severe health conditions such as cardiovascular diseases, kidney failure, cancer, etc. Since you might be physically fit at a young age, the premium of a health plan can be relatively low. If you purchase health insurance while nearing the retirement period, your insurer might charge you with a high premium rate.

    In a nutshell, a well-thought retirement pension plan can allow you to lead a comfortable retirement period without letting you worry about financial constraints. Since your secure future can depend on your current retirement planning, you should seek professional help. With the right help from an expert, you can avoid mistakes as well as ensure that you get to move in the right direction.