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Retirement Planning

What is Retirement planning?

Retirement is as certain as life and death and people have a life beyond retirement. This phase of life comes with its share of problems. On one hand, the income that the person was earning stops after retirement and on the other, this is the age for ailments and ill health. Retirement planning is simply sketching our plans to manage expected and unexpected expenses after retirement.

How can retirement corpus help a person post retirement?

A lot of things like children’s expenses, household EMI expenses and basic survival expenses comes under expected expenditure and unexpected expenditure includes medical emergencies. Hence retirement planning is very crucial to meet these expenses at a time when the income generation is stopped.

Having a retirement plan in place and making sure an income is generated out of it every month allows the policy holder and the family to continue living their lives in the same way that they had for all these years. It also allows them to meet the expenses of the plans that they had made for their retirement life.

Retirement planning makes it easy for retired people to meet their day-to-day expenses like groceries, household expenses and also unexpected medical emergencies at the same time. It makes the policy holder’s life financially independent and also tackle the medical challenges that age throws at them.

All your life, meeting the expenses was never a problem because you were earning every month and it was easy but retirement period is when you need to meet expenses without salary or income. It is important to save up for the rest of life after retirement to continue enjoy living with the same lifestyle.

What are the major financial challenges post retirement?

  • To meet day-to-day expenses
    Irrespective of age, we still need to buy products and services which we call daily expenses. The only change in scenario is the absence of income that makes it hard for the person to afford these things, let alone huge expenditure. Retirement planning is all about making this phase easier and having a consistent income being generated so that these expenses could be met, either big or small. Pensions or gratuities are not available to all and thus it is their individual responsibility to plan for their retirement life. Even if they did, the amount they receive is not enough to cover the expenses and live the kind of life that they did all this while. Building a good retirement corpus will make sure the family’s standard of living is not compromised and they continue to live the same way.
  • To meet medical expenses
    As a person ages, the chances of age-related problems and ailments tend to show up more frequently than before and this is the biggest financial need for a retired person. Although this expense is unexpected, it does need proper planning and that too from a very early stage to save up that much to meet the expenses. Medical expenses are in itself costly but in today’s day and age, it can cause a hole in your pocket. Medical insurance or Mediclaim doesn’t cover all the medical expenses and so your retirement corpus should be big enough to meet these expenses without troubling you much.

Why should one plan for a retirement corpus from the early stages of his/her career?

  • Uncertainties
    Life is uncertain and can throw anything at you anytime and that’s how it is. You can sometime be put in the happiest situation possible and also in the other extreme of it. And these situations involve a considerable financial amount. These uncertain situations involve natural calamities, injury or death to a dear one in the family or supporting financially to a family member. Planning a retirement corpus early can make up to a big amount and can come in handy during times like this. Thus when you step into retirement period, situations like this can be managed better with a corpus find that big without financial stress.
  • To make your dreams come true
    We all have plans for the future which we have been postponing for a long time either for financial reasons or for not having enough time to spare. Post retirement is the best time to fulfil these dreams and plans and for this your retirement corpus helps a lot. Retirement corpus in not only about meeting daily expenses and medical contingencies, it is also about making the golden period of your life memorable and colourful.

Case Study

A lot of people have plans to retire early, could be for many reasons. Few of them wish to travel the world, few wish to start a business and the rest wish to have a pleasant life with family without work tension. Consider a person is 35 years old and he/she wants to take an early retirement at 55 and settle down without having to work anymore after that point.

If that person wishes to have Rs. 40,000 at his disposal on a monthly basis for his expenses, Taru Financial services will put into place the best plan for that person to yield the desired amount at the target year. It is also important to note that Rs. 40,000 today is equal to Rs. 1,50,000 after 20 years, considering the inflation rate of 7%.

For the person to receive this amount monthly, he should be having Rs. 3 crores in his bank account so that he can get 6% interest from it, i.e., Rs. 1,50,000. Taru Financial Services does exactly this. It will find out ways or create one if necessary to accumulate the said amount Rs. 3 crores in the person’s bank account so that he/she can live the kind of retirement life he/she planned to have.