Retirement comes at different ages for different people but 60 is taken as the default age of retirement. But we think that retirement can be achieved the moment we get financial freedom.

Firstly, we need to check our daily expenses including household and lifestyle expenses. We cannot plan our retirement if we do not plan our expenses today. If we save today, we will have a retirement free of all worries, tomorrow.

Start early, get more

Retirement planning must start from the day we start earning. If we start early we will have the option to save little by little. So, if 35-years old plans for retirement at the age of 55 and requires RS 1 crore ‘after- retirement’ fund, then he will have to start saving from that very day, i.e. he has to save for his retirement, as early as possible. If you start saving at age 35, you will need to invest just about RS 6,600 approximately. But if you start saving at the age of 40, the amount is naturally going to increase to RS 14,800 approx., so that it accrues to RS 1 crore when the 40 years old retired at 55.

Tax Planning

When we start planning for Retirement corpus, we should try to make investments which are not taxable or taxed nominally at the time of maturity. Recently a person was advised to take a pension policy where they were assuring returns of 6.5 %, but as the person was in the tax bracket of 30 %, so after tax the effective return came around 4.55%. So before selecting a product, check the tax implication.

Inflation

Inflation is the key factor to be considered for retirement planning. We should select a product that beats inflation by +2% to 3% at least. If we start early we can select an aggressive product, but when we are near to our retirement or we have reached the target we should try to rebalance the portfolio to conservative product.