Retirement planning is planning for future. One should seriously start saving and investing for this goal when he/she starts earning.

Let’s go through the common questions asked (Repeatedly) about Retirement:

1.What is the right age to start saving for retirement?

There is no pre-fixed or particular age to start saving for retirement, but its always better to start early. One should start for retirement planning once they starts earning money. Our retirement planning depends primarily on two factors: time and return rate. Time is money, hence more time will help you to earn more returns.

But that doesn’t mean If you are late in planning for retirement you can’t do anything about it. Yes, you may have less time but with proper planning and savings, you can still make your retirement years peaceful.

2. How much?

According to the estimated number- you will need 75% of your pre-retirement salary (without any debt) to live comfortably. If you want to calculate the retirement corpus, you need to consider the following factors:

• · Annual expenses
• · Retirement Age
• · Current Age
• · Life expectancy/span
• · Inflation rate
• · Real return rate
• · The expected rate during the accumulation period and
• · Expected returns during retirement years

Determining retirement corpus depends a lot on your current cost of living or current lifestyle. Retirement is not only about getting freedom from work, but also about adjusting to limited income and reducing your wants.

3. Will my retirement funds/benefits not be enough?

Unfortunately not! Many people still think that the retirement savings with their employer or saving from retirement funds will be enough to survive during retirement years. But that is not enough. increasing cost of medical expenses, rising living standards, inflation, rising life expectancy etc. demand more funds for retirement.

4. How to plan for retirement?

Before starting investment planning for retirement, first important step is- to cover your basics. It means to make sure you have enough in the emergency fund; having enough health and term insurance cover.

Insurance: Insurance is not an investment; it’s a protection against risk or loss. It cover your basics in complete or partial restoration of insurable losses. Term life insurance is the best because it is an effective and easy product. Some insurance policies are sold under the tag “Savings for Retirement” But as said earlier, insurance is not an investment and it can be expensive to invest in such policies. With term insurance, it is also important to protect health by taking health insurance. Health care costs are also rising at a faster rate than inflation.

Buying health insurance at the early stages of life is always beneficial because it costs more as you get older. Even if your employer has provided you health insurance facility, it is advisable to take another medical policy.

After covering ‘Basics’ one can start investing in order to achieve the retirement corpus goal. Following are few options in addition with employer sponsored plans/benefits in which one can invest:-

Stock/ Stock Investment: Investing in stocks for retirement is a good idea. Your stock investment can deliver you excellent returns over a long term. Investing in Blue-Chip/Large Cap Securities helps you to accumulate decent sum and to beat the inflation. Set limits on your stock purchase as per your risk capacity. Invest long term and do homework before buying stocks.

Mutual Fund: If you do not want to invest in the stock market directly and take risks you can go for mutual fund investment. There are many advantages like diversification, low risk, professional management etc.

Real Estate: Real estate investment is another option for retirement planning. Real estate acts like a good bolster and can give passive income source.  There are few disadvantages like  non-liquidity, longer time to give positive returns,  still no other option can defeat it in terms of returns, growth and value appreciation. One should invest in this option after accessing their liquidity needs, location of property and financial situation.

Gold: Gold is another investment you can add in your retirement portfolio. This value-able commodity gives benefit of hedging and diversification. Though do not invest more than 10–15% in gold of your total portfolio cost.

Bonds/FDs: These are secure investment options. You can invest some part of your portfolio in bonds or FDs.

Consider these options while you are planning your retirement and invest in mix of equity and debt as per your risk, duration and goal. Remember, it’s your retirement and you must live it with dignity!

5. What if retirement savings are not enough?

This is again a common question and then the options are limited. Like start doing another job, increase your income sources, delay your retirement, change your lifestyle or find a place where the cost of living is low.

Start saving for retirement early so that you can spend your life during retirement peacefully and without financial stress.

Note:- Above article based on one of our Quora Answer.