INVEST EARLY FOR A STRESS-FREE RETIRED LIFE..!

INVEST EARLY FOR A STRESS-FREE RETIRED LIFE..!

From UTI MF

HAVING A WORRY-FREE RETIRED LIFE REQUIRES A GOOD RETIREMENT CORPUS.

BUT BUILDING ONE IS AN EXHAUSTIVE PROCESS AND SHOULD START AS SOON AS ONE STARTS EARNING

Retirement is one stage in life which simply cannot be wished away and everyone will stop working one day.The pay cheques will stop coming, but the living expenses won't end but keep rising due to inflation.

Worse, some of the more critical expenses like healthcare will be growing faster than the overall inflation. The sooner you start saving for that phase of life, the more comfortable your retirement will be.

Nothing can be worse than a long period of old age where you are gradually losing prosperity and then eventually entering poverty.

However, a bit of planning and disciplined investing is important to build a substantial pension corpus.

The uncomforting part is that even after building a large retirement fund, managing it after retirement remains a continuing challenge because one does not know how long one would need the corpus.

HOW MUCH SHOULD ONE SAVE EVERY MONTH?

A definite answer is impossible to guess because it's all in the future. But if you can answer a few questions, you can arrive at a reasonably good number.

So take out your financial planning note book to work on this.

To arrive at how much you would need during your retirement days, may be you can calculate how much you would require if you retired now.

Through the rate of inflation has come down a bit, we can still calculate with 8% as the annual rate of inflation.

If your current expenses are say nearly Rs. 35,000 per month and if you retire now you would need nearly Rs. 25,000 per month, the annual expenses add up to Rs. 3 lakh.

So, to maintain at least the same level of life style 25 years from now, at 8 per cent rate of inflation, you would need nearly Rs. 20.5 lakh per year.

Now, every year from then on you would need higher amount, again at the rate of 8%. So in year 26th, you would need nearly Rs. 22 lakh, in year 27th about Rs. 24 lakh, and so on. If you live for 20 years after your retirement, you would need to spend a total of about Rs. 9.4 crore.

The numbers might be numbing, but there is very little imagination here. It's all basic mathematics involving some reasonable guesses. So if you have to face this reality someday, it is better you start preparing for it now.You can blame it all on inflation.

If the rate of inflation is 6%, you need to spend much less than the Rs. 9.4 crore figure, which is Rs. 5.9 crore.

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