Retirement planning is crucial for achieving financial independence, which grants freedom from the necessity of earning a living. The ability to secure this freedom at a younger age, while still physically capable of pursuing desired activities, can be particularly advantageous.

Sunil Gavaskar once said, ‘Retire when people ask why, not when they ask why not?’ It taps into a powerful emotional truth- the desire to go out on your own terms, with a heart full of pride and a future brimming with possibilities. The idea of retiring when people ask “why?” rather than “why not?” stirs a potent cocktail of emotions. It’s about leaving on a high note, before the inevitable decline that comes with time.

Imagine this, Crisp morning air, a steaming cup of coffee on the porch, and the freedom to finally pursue that lifelong dream, whether it’s traveling the world, writing that novel, or spending uninterrupted quality time with loved ones. Retirement should be a golden chapter, a time to savor the fruits of your labor and embrace the adventures that await.

But what if that picture-perfect vision is clouded by financial anxieties?  The stress of dwindling savings, the fear of not being able to afford basic necessities, the burden of becoming a dependent – these are harsh realities that can steal the joy from your golden years.

Did you know that, as high as 9 out of 10 respondents above the age of 50 years regret not starting savings earlier for retirement! And nearly 1 in 3 urban Indians are worried about their savings depleting within five years of retired life. Equally alarming is that 2 out of 5 individuals have not started investing for retirement yet. Additionally, study revealed that while 64% of urban Indians are familiar with National Pension System (NPS), only 16% invest by making contributions. These are findings unveiled by Max Life Insurance Company Ltd, retirement survey, India Retirement Index Study (IRIS), conducted in partnership with KANTAR, the world’s leading marketing data and analytics company.

So, what are the barriers to investing for retirement?

Retirement planning isn’t just about numbers and charts. It’s about empowering yourself to take control of your future and paint a vibrant picture of your golden years.  Because with careful planning, you can turn that dream into a reality, ensuring financial security and peace of mind so you can focus on what truly matters – living life to the fullest in your well-deserved retirement.

Let’s embark on this journey together, one that paves the way for a future filled with freedom, security, and the chance to finally chase those dreams with a smile on your face.

WHY PLAN FOR THE RETIREMENT?

You retire from work, not life. You may have a new set of dreams for your post-retirement life. At the same time, you may also want to maintain your day-to-day lifestyle without worrying about expenses.
By planning in advance, you can define the path to achieve these life goals without any financial dependence.

Here is how retirement planning can help you.

Planning for retirement is not an option; it’s a necessity. By taking a proactive approach, you can secure your financial future and unlock the doors to a fulfilling and stress-free retirement. Remember, the earlier you start, the greater the power of compound interest, allowing you to accumulate a comfortable nest egg and turn your retirement dreams into reality.

Let’s consider Priya, a 25-year-old graphic designer starting with a salary of ₹3 lakhs annually. She decides to prioritize travel and enjoying her youth, she doesn’t contribute anything towards retirement savings, which ultimately leads to the following:

– Lost Opportunity Cost: Compound interest is a powerful tool. Let’s say Priya could have invested ₹5,000 monthly with a hypothetical 10% compounded annual return (XIRR). Over 35 years (until retirement at 60), this could have grown to roughly ₹1.90 crores.

– Impact on Standard of Living:  Without any retirement savings, Priya might solely rely on her Employee Provident Fund (EPF) or other social security benefits in retirement.  These might be significantly lower than her working income, forcing her to downsize her lifestyle or continue working part-time.

While retirement might seem far off for young adults, neglecting planning can significantly impact Priya’s financial security later. Starting early, even with small amounts like ₹5,000, allows for future growth through compound interest. This ensures a more comfortable retirement without major adjustments to her current standard of living.

WHERE TO INVEST FOR SECURE RETIREMENT?

Planning for retirement is crucial, and deciding where to invest your hard-earned savings is a critical step. There are various investment options available, for securing your future. Here’s a breakdown of traditional and new investment avenues for Indians, considering both security and returns:

Traditional (Old) Avenues for Secure Retirement in India are known for their stability and lower risk:

– Fixed Deposits (FDs):

• Returns: Fixed interest rates offered by banks for a specific period. Rates vary depending on bank and tenure.
• Security: Moderately Secure.

– Public Provident Fund (PPF):

• Returns: Government-backed scheme with interest rates reset quarterly.
• Security: Very Secure.
• Tax Benefits: Investment and interest earned are tax-free.

– National Pension Scheme (NPS):

• Returns: Market-linked returns through investment in different asset classes.
• Security: Moderately Secure.
• Tax Benefits: Investment qualifies for tax deduction under section 80C.

New Avenues for Secure Retirement offer potentially higher returns but come with some level of risk:

– Mutual Funds through Systematic Investment Plans (SIPs):

• Returns: Invest in a diversified basket of stocks/bonds. Returns depend on market performance.
• Security: Moderately Secure (Depends on chosen fund).

– Real Estate Investment Trusts (REITs):

• Returns: Regular income from rent and potential capital appreciation.
• Security: Moderately Secure (Market fluctuations and property risks).

– Annuity Plans:

• Returns: Guaranteed income stream after a certain period.
• Security: Secure (Depends on the insurance company).

Choosing the right investment option depends on your:

– Age: Your age significantly impacts your investment strategy. Generally, younger individuals have a higher risk tolerance and can invest in growth-oriented options like stocks. As you approach retirement, it’s advisable to shift towards safer avenues like fixed deposits or debt instruments.

– Risk Tolerance: How comfortable are you with potential losses? Individuals with a high-risk tolerance can explore equity markets, while those seeking stability might favor fixed-income options.

– Retirement Goals: Determine your desired lifestyle in retirement. This will help you calculate the corpus you need and choose investments that align with your goal.

GUIDE TO RETIREMENT PLANNING:

Planning for retirement might seem daunting, but it’s a process you can break down into manageable steps:

HOW RICHVIK CAN HELP YOU TO RETIRE COMFORTABLY:

Planning for retirement is crucial, and navigating the investment landscape can be overwhelming. This is where RichVik can play a vital role in guiding you towards a secure financial future.

– Evaluate available investible funds:

RichVik’s Investment potential Calculator can be a helpful starting point for selecting suitable mutual funds. Here’s how it can help: Investment Potential form helps you assess balance investible funds after considering all your Cash Inflows, Cash Outflows, Savings and contingency funds and Existing SIP Investments.

Link for our Investment Potential calculator- https://richvikwealth.in/investment-potential/

– Get a holistic view of your investments:

RichVik’s Asset Allocation Summary is a one-stop solution provides a clear and concise overview of all your assets, including: Stocks & Mutual Funds, Fixed Deposits & Bonds, Real Estate & Other Investments.

With the Asset Allocation Summary, you can gain instant insights into your overall financial health and make informed investment decisions with a holistic view.

Link for our Asset Allocation Summary–https://richvikwealth.in/asset-allocation-summary/

– Assess your financial goals and risk tolerance:

We understand the importance of aligning your investments with your goals and risk appetite.

We will ask you questions about your desired retirement age, income needs, and comfort level with potential market fluctuations.

RichVik will ensure that your goals made today are actually achieved with meticulous planning and dedicated support through our Chatbot ‘Goal Achiever Assistant’. The Goal Achiever Assistant will create a plan for you, showing how much, you need to invest either on a monthly basis or as a lump sum.

Link for our Goal Achiever Assistant–https://richvikwealth.in/goal-achiever-assistant/

– Choose the right Mutual Funds:

Based on your individual circumstances, RichVik will recommend suitable mutual funds that cater to your risk profile and investment horizon. We can explain the different types of funds available, such as equity, debt, and hybrid, and their potential benefits and risks.

KEY TAKEAWAYS:

– Early Start & Power of Compounding: Start to invest early for your retirement. The magic of compound interest allows even small contributions to grow significantly over time.

– SIPs for Affordability & Discipline: Systematic Investment Plans (SIPs) are a popular option for regular, affordable contributions towards retirement.

– Matching Risk Profile with Investment Mix: Understand your risk tolerance and choose a diversified mutual fund portfolio. This might involve a mix of Equity, Debt and Hybrid funds to achieve balance.

– Goal-Based Investing Should Be Your Priority: Goal-based investing is a strategic approach to managing your money that prioritizes achieving your specific financial objectives. Here’s why it should be central to your investment strategy:

• Clarity and Focus: It forces you to define your financial goals, both short-term and long-term. This clarity helps you prioritize your spending and channel your investments towards achieving those goals.

• Progress Tracking: Monitoring your progress towards each goal keeps you motivated. Seeing your investments grow fosters a sense of accomplishment and helps you adjust your strategy if needed.
• Peace of Mind: Knowing you’re working towards a secure financial future reduces stress and allows you to focus on other aspects of your life.

– Professional Guidance is valuable: Creating a personalized plan considering your unique circumstances and goals is very pivotal. Thus, it is always recommended to take professional guidance to optimize your financial decisions, and navigate the retirement uncertainties with confidence.

To understand more on the topic as well as to start investments please feel free to contact us:

Phone: +91-9324609115

E-mail: team@richvikwealth.in

The article is authored by Mr. Mayur Solanki from Team RichVik.