Gone are the days when people used to retire at the age of 55 to 60 and then spend their retired life. Today, it is possible for people to continue working even after the age of 60. Also, as per the report published by the National Health Profile, the life expectancy in India is 68.7 years. However, now it is normal to live up to 90 years of age with the advancements in medical treatments.
What this suggests is now you must be ready to support your retirement life for 30 years after retirement. While planning, do not forget to take into account growing inflation rates and increased rates of health care, caregivers, medical treatments and general lifestyle. While you plan for your post-retirement life, the two most important issues you face is one when to start planning for retirement and two how to save and invest money to live comfortably in your golden years.
The elders in the family often stress the importance of saving adequate money for the future. They know and understand the inflation rate is increasing with each year, and that increases the expenses to continue enjoying the same or better lifestyle, healthcare and other living costs. All these expenses are necessary expenses that impact your finances in your post-retirement life when there is very little income coming your way. You surely don’t want to face any monetary issues in your post-retirement time as it is the time when you expect to live a stress-free life.
To live a stress-free post-retirement life, it is crucial to plan retirement wisely. Retirement planning is a process where you earmark your financial goals for post-retirement life and take steps to accomplish them. With the current pandemic situation, increase in expenses, and work from home culture, saving and investment can sound daunting. Here are 10 rules that will help you to invest and save money wisely in 2020.
- Plan for more money than you may need – As retirement starts approaching, it is important to get a general idea of how much money will be needed to live the post-retirement life comfortably. While you estimate finances, keep in mind the growing rate of inflation and increased rate of life expenses. Thus, the first rule is to save more money than you need.
- Review your finances regularly – There may be instances where your investments and saving decisions take an unexpected turn. Thus, it is a good habit to keep reviewing your finances regularly and make the necessary alterations.
- Plan at the earliest – It is better to start retirement planning at the earliest as it can benefit from the power of compounding. Other than that, it gives you more time to alter investments if necessary and choose the suitable ones.
- Stay invested in real estate – Tried and tested, investing in real estate makes one of the best investing decisions as you can own the property and put it on lease to drive income.
- Reverse mortgage – Reverse mortgage is another way to create a steady income from the property. Though it is not a very popular investment option in India, it makes a good option.
- Senior citizens saving scheme – Many public sector banks have an investment scheme specially for senior citizens. These schemes qualify for tax benefits under Section 80C of the Income Tax Act and offer the highest interest rates.
- Post office’s monthly income scheme – This scheme offers a guaranteed return of 7.7% per annum along with fixed monthly income. It is popular as it keeps the initial capital intact while yielding better results than other debt instruments.
- Invest in mutual funds – It is an excellent decision to invest in mutual funds as they have higher liquidity and provide steady income. Also, it is one investing option with minimal risks.
- Invest in pension funds – Investment in pension funds and saving schemes make a good decision as they carry low risk and preserve capital.
- Stick to your investment plan – It happens more often that you set investment and saving goals but then deviate from them to fulfil other goals. Make sure that your dream car or bigger house don’t take a toll on your retirement corpus. Thus, it is vital to stick to your retirement planning.