Financial planning is essential to safeguard your retirement. It ensures that you have enough money set aside to live comfortably during your retirement years. But it is usually seen as a distant concern, and many people, especially millennials, don't consider retirement planning during the initial years of their career.
If you’re new to the professional world and haven’t started retirement planning yet, don’t wait longer. The sooner you start, the stronger will be your retirement corpus. While retirement planning consists of several financial tools, opening and managing your retirement savings account is one of the essential tasks.
In this blog, we’ll look at the different ways to save money for retirement, tips to keep in mind before starting, and how long you must plan.
Savings tips for retirement
As a millennial, your savings goals for retirement differ from those of your parents or grandparents. But, no matter your age group, it's essential to set and track financial goals and create a plan for reaching them. Start by implementing these five crucial tips for creating a retirement plan-
1. Set realistic goals
Establishing a savings goal aligned with your expected retirement income and life expectancy is critical. You must set realistic goals and track your progress regularly to save at least 10-15% of your monthly income.
To reach your savings goal, consider investing in low-fee, diversified equity index funds and practice the rupee-cost averaging strategy for consistent investing.
Remember, when planning for retirement, always look at long-term returns. You can build wealth over the long term by planning, saving strategically, and sticking to a financial plan.
2. Save, save and save!
Reducing your spending and increasing your savings is one of the most critical things you can do for retirement preparation. Increase your savings by cutting back on extras like entertainment and eating out.
Focus on investing in yourself and your future goals rather than spending money on unnecessary items and services.
It's essential to start saving early and consistently to have a strong account balance ready for retirement. So make sure to contribute enough to your account regularly to cover your retirement expenses.
You must also remember that planning for retirement requires patience, as it takes years to become financially secure.
3. Get a retirement account
There are several types of retirement accounts and government schemes to choose from. Each has its benefits, such as different interest rates and tax benefits.
When investing in a retirement account, you must consider the potential tax implications and restrictions associated with early withdrawals. Moreover, educate yourself on the various options and research the costs and benefits of each account type before opening your retirement account.
4. Diversify investment
Diversifying your retirement investments will help you reduce risk and maximize your savings potential.
Different investments, such as stocks, bonds, and real estate, are one way to accomplish this. You can also use an inflation and growth hedge to balance your retirement account. This will guard you against market volatility and ensure higher investment security.
To diversify your portfolio further and lower the overall cost of your retirement investments, you can also consider investing in low-cost index funds or ETFs.
5. Consult an expert
As a millennial, deciding when and how to retire can be a far-fetched thought. But it is crucial for creating an effective retirement plan.
If you’re unsure where to start, the best option is to consult an expert. They will help you calculate retirement savings and develop a plan based on your goals and income, ensuring post-retirement financial security.
How to start saving for your retirement?
Start early
The earlier you start, the bigger your retirement corpus.
Determine your retirement goals
Whether you want to buy a beach-facing property or go on a world tour, having a clear idea of your goals helps you determine exactly how big a corpus you need.
Say NO to unnecessary expenses
Plan your expenses wisely to pay off all your debts before you retire.
Diversify your investments
Invest in multiple instruments to ensure safe and stable returns.
The takeaway
With multiple online investment platforms in the market, it has become easier than ever for millennials to invest in different financial instruments. This is also an excellent way to create a strong retirement corpus. But if you haven’t started planning for retirement yet, this is your cue to start now. We hope this information helps you calculate retirement savings and plan better so you can enjoy your golden years in peace.
01 March 2023
4 mins read
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