How NOT To Retire Well!

Avoid Mutual Funds

One of the biggest Retirement Planning mistakes you can make is to stick with traditional, low-return instruments and avoid Mutual Fund Investments. Simply put, when it comes to Retirement Planning, Mutual Funds work really well. It would be much wiser to channelise your long-term retirement savings into aggressive, equity-oriented Mutual Fund investments through SIPs (Systematic Investment Plans) instead.

Save for tomorrow, keeping today in mind!

If you want to retire with a woefully inadequate sum of money, the best way to do it is to save for your post-retirement years keeping today’s expenses in mind! Rs. 50,000 per month might suffice today – but may actually be worth only Rs. 8,000 or 10,000 per month in the year that you retire.

Wait until you’re 40

The best way to retire with too less is to postpone your retirement planning until you turn 40! After all, you have a good 20 years and that will surely suffice, you may think. Big mistake! Let’s put the numbers in perspective for a moment. For a 40-year-old to save 5 Crores for their retirement by 60, a monthly saving of at least Rs. 50000 is required. For a 30-year-old, the number drops to under Rs. 15000. That’s how compounding works!

Go low risk

One of the easiest ways to ensure that you outlive your retirement savings is to save for your retirement in low return instruments that give you annualized returns of 7 per cent to 9 per cent, or even lower. Even the proverbial darling of Indian savers (PPF) earns you just about 8 per cent per annum. Let’s take a look at how the numbers add up: Rs. 5000 per month saved up in an instrument earning 12 per cent compounded will grow to approximately 1.75 Crores over 30 years. The same amount would add up to approximately 75 lacs in an 8% return instrument.

Don’t Factor in Your Medical Expenses

Another way to set yourself up for post-retirement strife is to not factor in rising medical expenses that you’ll most likely incur post-retirement.. Bear in mind that Health Insurance becomes frightfully expensive for senior citizens. When it comes to planning for your post-retirement medical expenses, you must prepare for the worst while taking excellent care of your health.

Depend upon Your Kids

This is the best way to incur both Financial and Emotional strife after your retirement. Hard-hitting as this might sound; your children are not a contingency plan when it comes to retirement. Joint families in India are breaking down and in today’s complex and high-stress world; personal relationships are constantly under threat. Why would you want to take the chance?

To sum up – retirement planning is serious business. Don’t delay it until the penultimate moment o just save blindly into low-risk instruments and hope that things will “work out” in the end. Having a disciplined retirement plan in place is the only way to avoid decades of stress once you hang up those work boots for good.