Secure your golden years: Expert tips for effective retirement planning

To enjoy a comfortable life when you are older, start your retirement planning today. While your income sources might no longer be available, your savings and investments should come to the rescue. That is why building a good corpus must be a priority, considering your needs, lifestyle, and inflation. 

Successful retirement financial planning requires setting clear goals, maximising savings, and regular portfolio review plans. From making necessary, timely adjustments to your retirement plan to calculating the cost of living that will come up later, there is a long list of things of things to consider.

Let us take a quick look at how you can improve your retirement planning and what to consider when creating a winning strategy.

Why is retirement planning important?

There are a few reasons that make retirement financial planning a crucial task, those include -

• Financial security 
  
  

  You may not have a regular monthly salary after retirement, as you did in your earning years. That's why having a retirement plan will help you create financial security for your golden years. With a steady flow of income, you can lead a comfortable life post-retirement.

• Peace of mind 
  
  

  When you know all about how to plan for retirement, it brings peace of mind. Your retirement corpus will ensure no worries about paying for basic expenses like medicines, food, utility bills, etc.  

• Independence 
   

  Retirement financial planning allows you to enjoy a worry-free life. After retiring, you will not have to depend on your friends or family members for financial support. There will be complete independence in how you want to live during your golden years. 
  

Also read - Rules to achieve Successful Retirement 

How to plan for retirement?
 

Retirement planning requires careful consideration and planning. Here are some essential guidelines you can follow -

• Begin early 
  
  

  Start retirement planning as early as possible. The sooner you start, the more time you have to save and benefit from compound interest. Your investments will have a better chance to grow and help you achieve your desired financial goals.

• Estimate your retirement expenses 
  
  

  Realistically project your future expenses by factoring in the average inflation rate. You must account for some crucial expenses: housing, healthcare, living costs, travel, and leisure activities.

• Create a budget and save consistently 
  
  

  Develop a realistic budget that includes savings under retirement financial planning. Keeping aside a specific part of your monthly income under a dedicated Savings Account will boost your retirement plans.  

• Portfolio review 
  
  

  Spread your retirement savings across a range of investment options. You must consider a mix of stocks, mutual funds, fixed deposits, recurring deposits, etc. Regularly review your portfolio to maintain the desired asset allocation under your retirement planning corpus.

Use the magic of compounding
 

Here are some ways you can leverage the benefits of compounding for your retirement planning -

• Regular contributions 
  
  

  You must make regular contributions to your retirement account. When you deposit money every month, it ensures stable growth for the base amount. Moreover, steady contributions increase the period for interest calculations. Both these factors work collectively to allow the compounding effect to work better.  

• Stay invested 
  
  

  If you wish to create a sizeable corpus through retirement planning, keep your investments. Let them complete their tenure if you opt for a Fixed Deposit (FD) or a Recurring Deposit (RD). If you do not, you will lose out on the interest income and the benefits of compounding .

• Reinvest interest 
  
  

  If you have investments that pay dividends or interest, do not withdraw them. Instead, your focus must be on reinvestments under retirement planning. You allow interest and dividends to compound and generate more returns by reinvesting.

Over time, this compounding effect will significantly boost your retirement savings.

Focus on systematic investments

You must maintain a systematic approach while investing in Savings Account-related products during retirement planning. Here are some of the popular options you can explore -

• Fixed deposits (FDs) 
  
  

  FDs offer you guaranteed returns, making them a reliable choice for retirement planning. FDs offer a fixed interest rate over a specified term and are free from market risks. You can opt to withdraw the interest earned after a specified period to create a steady source of income. You can also reinvest the interest to let the magic of compounding work. 

• Recurring deposits (RDs) 
  
  

  RDs also offer you assured returns as they come with fixed interest rates. Herein, every month a fixed amount will be debited from your bank account and credited to the RD. The interest income will thus keep on increasing with every deposit. RDs encourage savings as regular contributions allow you to earn a higher interest income.

• Every drop counts for retirement planning 

Remember, every rupee invested is a rupee earned. Small steps can lead to a big impact on your economic well-being during your retirement years.

• Start small but start now 
  
  

  Small contributions towards your retirement planning can make a huge difference over time. For example, saving just Rs 1000 per month for 30 years with an average annual return of 8% could accumulate over Rs 15 lakhs.

• Avoid unnecessary expenses 
  
  

  Analyse your current expenses and identify areas where you can cut back. Small savings on everyday items, such as dining out or shopping, can increase over time. For instance, by reducing monthly expenses by Rs 500, you can save Rs 6000 annually. These savings can be directed toward your retirement financial planning.

• Take advantage of tax benefits 
  
  

  Explore tax-efficient retirement options such as tax-saving FDs. These schemes provide tax deductions and help maximise your savings. For example, you can claim tax benefits under Section 80C of the Income Tax Act, 1961, by investing in tax-saving FDs.

• Add income sources 
  
  

  Explore opportunities for generating additional income during retirement. Taking on some part-time work-from-home gigs can supplement your retirement savings. For instance, you can offer consulting services to generate extra income.

Switch to a senior citizen account

Switching to a Senior Citizen's Savings Account later can help you get better benefits when your retirement is closing in. Some features of the account include - 

• Exclusive benefits 
  
  

  Senior citizen accounts offer exclusive benefits making them a lucrative option for retirement planning. These benefits include higher interest rates, lower transaction charges, priority customer care, and more. For example, Metra Trust offers interest rates of up to 8% p.a. on FDs for senior citizens.

• Specific needs 
  
  

  Senior citizen accounts cater to the specific needs of retired individuals, usually 60 years or older. For instance, Metra Trust offers up to 7%  p.a. interest on its Senior Citizen Savings Account and free doorstep banking.

• Insurance benefits 
  
  

  Senior citizen accounts also provide additional benefits under retirement planning. These benefits can be invaluable during retirement.

• Convenient features 
  
  

  Senior citizen accounts offer convenient features like doorstep banking and monthly interest credits, simplifying the banking experience.

Also read - Wondering how much money you need to retire? here’s your answer

In conclusion
 

To enjoy a stress-free retirement planning experience, you must opt for a reliable banking partner. This is where Metra Trust emerges as a highly preferred choice. You can get interest of up to 7%  p.a. on Metra Trust Savings Account and 8% on Metra Trust Fixed Deposits for senior citizens. With many convenient features, Metra Trust caters to all your needs before and after retirement.

Click here to open your IDC FIRST Bank Savings Account.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.