Retirement planning goes beyond wealth as it is necessary to prepare well for post-retirement social life apart from building corpus.

A recent survey found that the current generation of retirees in India generally regret not saving enough in life. Also, those who are now preparing for their retirement expect to save at least 6 years more than their previous generation. Proper retirement planning should include their financial and psychological needs.

Retirement planning is relevant as the Indian demographics show a trend towards higher life expectancy, growth of nuclear families and absence of a social security system. Even so, retirement funds are only a small part of total savings. Most of us don’t save enough for a comfortable retirement. Unfortunately the idea of ​​retirement planning in India comes very late in life and hence the need for retirement planning is increasing very fast nowadays.

Basic reasons for planning for retirement:-

• inflation
• skyrocketing medical expenses
• check payment / pay withholding
• no one likes to be dependent
• 60 years old no longer

Here we would like to suggest and avoid 5 common mistakes while planning for retirement:-

– Not creating a retirement road map ie:

• What kind of lifestyle are you planning after retirement?
• What kind of medical expenses may arise due to the current health conditions of my self and family members
• what are my family commitments
• Will I be renting or owning a house?
• will i have travel plans
• Would I like to pursue a hobby that costs money

Lack of knowledge of fund requirement at the time of retirement:

• Budget monthly expenses after retirement, multiply it by 12 to give the annual requirement and then divide it by 7% to get an estimate of the corpus requirement

– Don’t start early. Early start will help in reaching the target due to high compounding

Not planning for contingencies in retirement planning. The most common contingencies you must prepare for post retirement are sudden medical exigencies.

– Not making smart investment decisions. Here it is very important to take into account the tax bracket of the individual, post tax return of a financial instrument, liquidity of the investment vehicle, etc.

Financial freedom can be achieved if one has set realistic deadlines for retirement, done a little planning with confidence and enjoys the journey. Before choosing an investment vehicle one should assess their risk appetite and not chase returns as it can derail the journey towards the bigger goal of retirement.

The current monthly expenditure may increase 7 times over the next 30 years due to inflation. So it is important not only to save but also to invest in the right way. Aim to accumulate a healthy retirement corpus by combining monthly savings and lump sum investments.

A good retirement plan will help you enjoy your second innings and longer vacation which is also known as retirement. Hence, choose your investment vehicle wisely to ensure a good retirement corpus.

So don’t think twice! Plant the seed that will make your future flourish and enjoy the time doing all the things you never had time for while working.

Views are personal: The author is Shashi Bhushan Verma, a Kolkata-based mutual fund advisor.

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