We list 5 ways that will create avenues for future financial independence…here’s to a wonderful retirement!
Retirement is a wonderful phase in the life of the person that has planned for it well. Here are 5 steps to ensure a peaceful retirement –
1 Buy a pension plan. The basic principle of good retirement planning is to start as early as you can – this gives you more time to make suitable investments, like buying a good pension plan. There are a variety of good pension plans in India, which help in creating a large financial corpus for your post-retirement needs. The premium you pay towards the policy is invested in suitable market securities. The pension policy starts paying you once you retire, so that you can take care of household expenses and other costs of living once your regular income stops. Do use a pension planning calculator to find out the premium and sum assured in the plan.
2 Create a retirement savings fund. Another way to create a good corpus for your retired self, is to have a separate savings account only for retirement. Set up a savings account that you periodically deposit money in – do take care not to withdraw money from it. By the time you retire, there will be a large fund of money waiting for you to do with it as you wish. Besides, you also earn quarterly savings account interest on the deposited money.
3 Downgrade expenses. A good way to save money for the future is to curb expenses in the present moment. These can include driving to work in your own car every day instead of carpooling with colleagues, eating out instead of cooking at home, not availing discounts on online shopping in favour of going to the stores, etc. You will be amazed by how much money you end up saving when you curb your expenses.
4 Buy life insurance. Life insurance is necessary in today’s uncertain times. Not only does an endowment plan support the aims of the pension plan that you buy, a money back policy offers periodic payments to help you achieve your goals. Meanwhile, a term insurance plan protects your family’s interests in your absence. You can time the tenure of the money back plan to coincide with your retirement age, or invest in a unit linked insurance plan for higher returns.
5 Monetise assets that you don’t need or use. You could have a spare room in your house, an extra desk space in your office, or a car that you drive only on weekends. You can lease these out to people who need the space, like tourists looking for Airbnb accommodation, or start-up owners looking for communal working spaces. Meanwhile, you can hire out your car to transport companies on the weekdays to earn a good side income. The money earned from these assets can contribute to your retirement fund.