Dussehra is a major Hindu festival that is celebrated across all of India with a lot of excitement and festive fervour. It's also a festival where a lot of people make major financial purchases such as vehicles, electronic gadgets, jewellery, or even real estate. People should look at this auspicious occasion as an opportunity to examine their finances and retirement planning. Retirement planning is an important aspect of personal finance that many tend to overlook early in their careers. Retirement planning from an early age can set you up to be financially stable and provide you with the opportunity to pursue your passions later in life. On the auspicious occasion of Dussehra, we have compiled a list of useful tips that you can implement if you are about to start your retirement planning.
Pay Off Your Debt
Before you can effectively start saving up for your retirement, you have to ensure that all of your major debt apart from a home loan mortgage is paid off. Continued debt and interest rates can slowly eat away from your savings in the long term. So if you want to start your planning, one of the most basic steps you should take is to pay off your short-term debts such as EMIs, credit card bills, vehicle loans, etc.
Calculate Your Monthly Expenses
An important aspect of financial planning is understanding how much money you are going to need in monthly or yearly expenses once you're retired. As a general rule, financial experts recommend that you should have retirement savings of at least 33x of your annual expenses. To be on the safer side, you can aim to save up to 40x of your annual expenses. Moreover, you also need to factor in the increasing cost of living due to inflation.
Start Saving Up
Once you have established exactly how much money you are going to need after retirement, you need to start saving up every month. Make it a habit to save a portion of your salary every month. As your income grows over time, ensure that your rate of savings also grows so that you can reach your retirement savings goal faster. As a way to ensure that you consistently save up every month, try to separate your retirement savings even before you start paying off your bills and expenses.
Consider Lowering Unnecessary Expenses
Many people have a habit of spending money on wasteful things excessively. For example, people who work in very hectic or busy jobs tend to order food a lot instead of cooking meals at home. Ordering food every day or even multiple days a week can be extremely expensive compared to cooking meals at home. Moreover, many people like to shop for clothes, gadgets, and accessories whenever they have extra cash lying around, even if they do not necessarily need all of these things. These are just a few expenses that you can cut down on. Moreover, buying luxury items that do not have a high resale value like luxury cars, expensive tech gadgets, etc, are financial decisions that should be reconsidered.
Get A Health Insurance If You Don't Have One
Private healthcare costs in India can wipe your entire life's savings if a member of your family falls sick chronically with an illness that needs prolonged treatment or complex medical procedures. In order to protect your retirement savings from these unexpected heavy medical costs, it is important to buy a good health insurance plan for yourself and members of your family.
Invest Your Savings Wisely
The best way to grow your wealth is to systematically invest your savings. It is a good idea to consult a professional financial planner who can guide you regarding investing your savings in a diversified manner. Diversifying your investments refers to the practice of spreading your investments in various different opportunities to minimise risk and stabilise returns over time.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
