Why Should Retirement Planning Be Part Of Financial Planning?
Written by axis | Published :August 3, 2022 , 9:00 am IST
If you are currently successful with your job and living the best time of your life, you may have not thought about your future. It is quite common for people to give the least importance to their future because they are busy enjoying their present. Even those who are effective financial planners sometimes skip the idea of planning for their future and just focus on short and medium term goals. Right now you are young and aggressive in nature, everything is going your way. You have a good job, a house, parents to back you up if need be, and everything just seems fine at the moment.
But the truth is (believe it or not) you are going to need more money when you grow old and are nearing retirement than you right now. When you are young, you do not have to worry about medical bills and hence you may not invest in a good healthcare plan. However, when you grow old and when the age takes a toll on your health, you are going to need a medical corpus to help you pay all your bills. If you haven’t invested in a good health plan or turned a blind eye on retirement planning when you were young, it might all come back to haunt you when you are near retirement.
What is retirement planning?
Retirement planning is the act of determining your income sources, approximating your expenditure and investing in a feasible retirement plan so that you are able to build a decent retirement corpus for your sunset years. That’s because after you retire, your main source of income which is your monthly salary will come to a standstill. This is why one needs to learn to live on a fixed budget and also invest in a decent retirement plan.
Retirement planning or building a retirement corpus is a long term process. Which is exactly why one must consider investing in a retirement plan so that they are able to save more for their sunset years. You do not want to be a liability on your children or your estranged relatives when you grow old. It is always a good idea to have enough savings in your kitty that will not only help you take care of your daily expenses but also help you fulfil other goals like buying a vacation home or going on a world tour.
How do retirement planning and financial planning go hand in hand?
When you are making a financial plan, you are supposed to determine and prioritize your short term and long term financial goals. While you prioritize your goals, building a retirement corpus should be a part of your long term goal. That’s because building a retirement corpus is a long term process. You might need a minimum of Rs. 25 lakh to Rs. 30 lakh to help you become financially independent after you retire. Hence, the earlier you start, the better it is. It will give your investments a decent amount of time to grow and you might benefit from compounding in the process
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