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Retirement Planning for Beginners - 7 Golden Tips

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Retirement Planning for Beginners
January 13, 2023

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Retirement planning is something that a lot of people fail to take seriously in their 30s and 40s. Of course, when an individual suddenly wakes up on the wrong side of 50, elbow-deep in debt, they start to worry that they don’t have enough savings to get them through their golden years. Thankfully, there are certain important steps that you can take, which will help you plan for your retirement, even if you’re less than 20 years away from saying goodbye to the workforce.

1. Re-evaluate Your Risk Appetite

As you have fewer years to plan for your retirement, now may seem like a good time to make a risky investment that could give you a big pay out. Sadly, this couldn’t be further from the truth. Instead of increasing your risk appetite, you should consider investing in safe avenues that promise a monthly income. A retirement plan would be a good investment at this time.

2. Consider Compounding

While investing in a scheme that offers compound interest may have been better if you were in your 20s or 30s, there’s no denying the fact that it will still help you build a significant corpus in time for your retirement. To increase your earnings, find yourself an investment that compounds interest quarterly instead of yearly.

3. Don’t Disregard Debt

Ideally, you shouldn’t retire with the sword of debt hanging over your head. Before you retire, make sure you clear any debt you may have. This could include personal loans, credit card bills, or any other dues you owe.

4. Cut Your Current Expenditure

We aren’t asking you to lower your standard of living. Instead, try and cut corners when you can. If you generally go out to eat every week, try going out just once or twice a month. Don’t make a big purchase like a house or car unless it’s absolutely vital. And if you’re independent, working children still rely on you for money, talk to them about becoming self-sufficient.

5. Postpone Your Retirement

If you’re active and healthy, you could consider pushing your retirement back a few years. Instead of hanging up your boots at 60, you could work until you’re 65, allowing you to earn and save for another 5 years.

6. Make a Move

It may seem bizarre, but retiring in a different city from the one you work in could be a financially-prudent decision. In a city like Mumbai, everything from transportation to housing and even groceries are quite highly priced. On the other hand, if you were to move to a city like Nagpur, your outgoings would decrease significantly, allowing you to enjoy a higher standard of living with less funds.

7. Pull out Your Provident Funds

Depending on where you work, your company may have started a Provident Fund (PF) for you. A part of your salary every month will be deducted and invested in the fund for you. If you find yourself on the brink of retirement, you can choose to pull the money out of your PF and invest it in a good pension plan for yourself and your spouse.

Ideally, you should start planning for your retirement right from the moment you start working. But, if you’ve put off saving till later, don’t worry, you can still enjoy a comfortable retired life, as long as you remember to take these seven important steps.

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ARN: ED/12/19/17049

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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