5 tips to start your retirement planning at the earliest
The key to a secure retirement is to plan ahead. When we are young we tend to think we have enough time. However, the thought is both true and false at the same time. One day you will have to take retirement from your work, and that's an inevitable truth. The following pointers might help you get started in the right direction.
Devise a retirement plan and stick to it
Determine what you want to achieve during retirement, including the lifestyle you want, the expenses you expect, and the age at which you plan to retire. Make an estimate of your retirement income needs based on your retirement goal and current financial situation. Develop a savings plan that accounts for your retirement income needs, projected expenses, and the time you have until retirement.
Start investing as early as possible
The sooner you begin saving, the longer your investments get to grow. Make investments in a separate account for your retirement. There are multiple investment options available - equity-based investments such as stocks or mutual funds, fixed deposits, corporate bonds, exchange-traded funds, etc. Do thorough research to make an informed decision and consult a financial advisor if required.
Invest more as you make more
If you are a salaried employee, you are bound to get promotions or raises over time as you progress in your career. So, each time your income increases, make sure to increase your retirement investment proportionately. This way you can take advantage of compounding returns and build wealth over time. Additionally, it can help you achieve your financial goals faster.
Set up automatic payments to your retirement account
If your employer provides automatic payroll deduction, be smart enough to take advantage of it. Ask your employer to increase the deduction amount. Spending money has no limits, this move will help you in limiting your expenses. Your taxes will also be lower and over time you will reap more benefits of compounding if you increase your deduction amount.
Get your health insured
Growing old comes with a slew of health problems, which can dig a big hole in your pockets. With rising medical inflation, today, health insurance is no more a choice but a necessity. It is important to have a health cover that provides for your hospital bills during medical emergencies. So, add a layer of protection by getting your health insured.