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In order to lead the golden years of your life comfortably, it is essential that you start planning your retirement well in advance, while you are still young and earning a steady source of income. When planning your retirement, you will need to decide on a significant corpus that will be sufficient for you to lead your life without financial burdens. Additionally, this amount should be sufficient to cover the expenses that you may incur during your retirement years. Thus, make sure to invest your money in the right avenues, and start planning for your retirement right away.
1. Draft a financial plan: The first step to plan for your retirement is to draft a detailed financial plan. For this, you will need to identify how much money you will need during your retirement years. Make sure to take into account your current age, current pay, earning potential, debts and liabilities, investment and savings, your lifestyle, and inflation into account to arrive at an accurate sum. Make sure to also decide how much money you will need to put away on a monthly basis towards your retirement fund and what avenues you will have to invest in for your retirement.
2. Save more: In order to accumulate a significant corpus in time for your retirement, it is essential that you start spending less and saving more. While there is no fixed rule on how much of your monthly income you should save, make sure to save at least 10% – 20% of your monthly pay, if not more.
3. Clear off debts: If you have a number of liabilities like loans and debts, you would know how the monthly EMI payments can reduce your disposable income. Thus, make it a point to clear off your debts as soon as possible. Not only will you have more money once you clear off your debts, but you will also be saving more since you won’t have to pay additional interest to lenders. Thus, any time you get a bonus or have some extra money, make sure to use it to clear your debt.
4. Use your employee benefits: Employers are required to provide employees certain benefits such as EPF (Employee Provident Fund), health insurance, etc. These benefits provided by your employer will help you save money in the long-run. Also, make sure to ask your employer if you can subscribe to any other voluntary benefits that they might be offering.
5. Purchase an annuity/pension plan: A pension plan is a type of life insurance product that offers policyholders a fixed source of income during their retirement years. Policy buyers will need to pay a single premium to purchase these plans, in most cases. Post this, they will be eligible to receive regular payouts from the insurer.
Many insurance providers and other financial institutions offer pension calculators on their official websites to customers to help them calculate how much money they will need to accumulate before they retire. Given how important it is to know how much you will need to save, it is recommended that you use a pension calculator at the earliest.
Pension calculators help you calculate your retirement corpus on the basis of your annual income, age, savings, expected growth rate, nature of accommodation, etc. Essentially, this tool will help you determine how much you need to invest on a monthly basis in order to lead a comfortable life after retirement.
While the exact inputs that you are required to enter will vary based on the pension calculator you use, the basic information that you will need to key-in is as follows:
Planning for your retirement is of utmost importance if you keep yourself from facing any financial hassles in the future. Make to use a pension calculator today and invest accordingly for a financially secure retirement.
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