Navigating the road to financial independence


In the beginning of one’s career and even during the middle of it, retirement seems like a distant dream. Yet, if one wants, one can aim to ensure that they have the financial security and freedom to enjoy their golden years to the fullest. However, for that to happen, planning is necessary.

While pre-retirement expenses tend to be more focused on career, family and saving for the future, post-retirement expenses tend to be more focused on leisure, healthcare and maintaining a comfortable lifestyle.

Reasons for retirement planning:

Retirement planning is essential for individuals for a number of reasons:

  • Longer life expectancy: With an increasing life expectancy, it is important to have enough savings to support yourself during retirement years.
  • Limited social security: The social security is limited, making it essential for individuals to plan for their own financial security during retirement.
  • Inflation/Rising cost of living: Inflation erodes the value of money over time which means that individuals need to save more in order to maintain their standard of living during retirement.
  • Medical expenses: Healthcare costs are pivotal to understanding the importance of retirement planning. While other normal expenses continue to rise steadily, healthcare inflation is growing at a much higher rate.

How to plan your retirement?

  • Begin by setting a retirement goal. This will give you a clear idea of how much money you will need to save and invest in order to retire comfortably.
  • Determine your current financial situation, including your income, expenses, and any debt you have. This will give you a clear picture of where you stand financially and what you need to do to reach your retirement goal.
  • Create a budget and stick to it. Make sure you are saving enough money each month to reach your retirement goal, while still being able to cover your current expenses.
  • Start investing for retirement. Consider a mix of different types of investments, in order to diversify your portfolio and reduce risk.
  • Review and adjust your investment portfolio, if required. As your income and expenses change, or as you near retirement, it may be necessary to adjust your investment portfolio in order to stay on track.
  • Consider contacting a financial advisor. A professional can provide you with personalised advice and help you create a plan that is tailored to your specific needs and goals.

When to start retirement planning?
Starting early and taking a disciplined approach to retirement planning may be crucial because it gives you more time to save and invest, and it may also allow your savings and investments to grow over time. The power of compound interest means that the earlier you start saving and investing, the more your money may grow over time.By starting early, you have more time to weather market downturns and other financial setbacks. You’ll also have more time to adjust your investment strategy and make changes if needed. This may help you to stay on track to reach your retirement goals.Corpus required for retirement planning
It is not necessarily true that a large corpus is needed to plan for an early retirement. It ultimately depends on the individual’s retirement goals, lifestyle, cost of living, etc.

One can use retirement calculators to help estimate the amount of savings needed for the desired lifestyle during the retirement years.

While a large corpus can help to ensure that you have the financial resources you need to maintain your desired lifestyle during early retirement, it is not necessarily needed. With a well-planned and disciplined approach, it is possible to achieve an early retirement with a smaller corpus by being mindful of expenses, increasing income, and investing in a diversified portfolio that has the potential for higher returns.

Views are personal: The author – Hemant Pandya is the Managing Partner at Greenedge Capital Advisors Pvt Ltd.

Disclaimer: The views expressed are of the author and are personal. TAMPL may or may not subscribe to the same. The views expressed in this article / video are in no way trying to predict the markets or to time them. The views expressed are for information purposes only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you. Please consult your Mutual Fund Distributor before investing. There are no guaranteed or assured returns under any of the schemes of Tata mutual Fund.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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