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5 tips on how you can save money and secure your retirement

  • Highlights

  • Start investing early to build a retirement corpus

  • List your goals and create an investment portfolio accordingly

  • Devote some money in assured earning government schemes

  • Invest in PPF or FD to generate income after retirement

When you plan your finances for retirement in advance, you can enjoy the same lifestyle after retirement without compromising your leisure, entertainment, travel and hobbies. So, start planning for your retirement as soon as you start earning. However, saving alone is not enough, you should also devise a plan to make your savings grow even after retirement.

Here are a few tips that will help you fund your retirement with ease.

1. Start investing early

When you are young, the thought of retirement is bound to seem far away in the future. However, it is needless to say that starting your retirement planning decades before your retirement age will help you save more and with ease. Thus, it is good to start your financial planning for retirement in advance, when you are between 21 to 30 years old. When you begin early, you will be able to build a steady corpus of funds, which are sure to grow by gaining their own share of dividends and interest over time.

2. Invest as per your goals

View everything that you wish to achieve or do after retirement as your goals. These can be buying a car, taking yearly vacations with your spouse, and pursuing your hobbies. Then there are emergencies and responsibilities that you will have to keep in mind while planning your retirement corpus. These may include your child’s marriage, hospitalisation and medical expenses for you and your family, and even home renovation and repair costs. So, create a retirement plan including your responsibilities and desires. Having goals for your future and planning for them will help you understand where you are standing today and how much you can save and invest to fulfil this list.

3. Create an investment portfolio as per your age

Build an investment portfolio based on your financial condition, your ability to take risk and the timeline for your retirement. Based on your risk-taking capability, you can diversify your portfolio and include equity, debt schemes, and mutual funds or invest in only assured return instruments such as FDs and PPF, among others. Experts say that you should ideally save at least 10% of your monthly income from the time you start to earn. Thus, you can divide this 10% across a mix of instruments to grow your wealth.

4. Invest in government schemes

Purchase government bonds to earn at least 8% on your investment over a tenor of 10-15 years. Alternatively, you can invest in National Pension System (NPS). The Government of India sponsors this tax-efficient flexible pension scheme. Thus, interest gains on your investment are assured and higher in case of NPS. Also, you can claim an additional Rs.50,000 owing to your NPS investment alongside the regular Section 80C claim under the Indian IT Act. Further, you can invest in Immediate Annuity schemes via insurance companies. The exclusive feature of these schemes is that it pays you a fixed pension for the rest of your retirement life without the limitation of a tenor.

5. Plan for regular income post-retirement

To earn regular income post retirement, you can invest in certain government plans and enjoy its benefits after retirement. Monthly Income Schemes (MIS), Pension plans and the Senior Citizen Saving Scheme (SCSS) are some of the top schemes that will help you earn an income as pension or high return post-retirement. You can also invest in Company FDs to receive up to 8.75% interest on your investment. Also, as per RBI rules senior citizens get 0.35% extra interest on their investment. So, invest in a cumulative FD years before retirement and transfer it to a non-cumulative variant after you retire to access the interest payouts as regular income all through your retirement years.

With these 5 tips, you can create a substantial nest egg for retirement. Otherwise, you will be dependent on others for your financial needs post-retirement. So, start planning today and understand the importance of savings.

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