People often remain worried about investment strategies for building retirement corpus at different life stages. Most people procrastinate their retirement planning for later working years. However, an effective retirement planning should involve several decades of investments across different life stages. As each of these life stages would be unique in terms of income, expense and investment, it needs to be factored in for devising an optimum investment strategy for post-retirement years. Sahil Arora, Director, Paisabazaar.com, shares his knowledge on the investment approach for different life stage investors to create an adequate post retirement corpus:
 
20-30 years (young investors)
 
Retirement appears a lifetime away for those in their 20s and 30s. Financial goals such as purchasing a car or saving for holidays are usually prioritized over investing for retirement goals. However, we have minimal financial obligations in 20s and 30s than later life stages and hence, investing early can expand the scope for accumulating higher corpus for post-retirement life. 
 
Shifting your retirement investment to later years would only result in making higher contributions. For instance, if a 23 year old invests Rs 5,000 each month at an assumed annualized return of 12%, he would be able to build a retirement corpus of Rs 4.1 crore by the time he turns 60. However, if he start saving for retirement at 43, he will require a monthly investment of Rs 62,000 to build the same corpus at the same rate of return. 

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To create an adequate retirement corpus, young investors should consider investing in equity mutual funds. Longer investment horizons will allow more time for their retirement investments to recoup from market volatility and also make the most from the power of compounding. Opt for the SIP route of investment as automatic deduction from your bank account for retirement investments at regular intervals will ensure financial discipline. Doing so will also save you from the perils of market timing as SIPs will average your investment cost during bearish market or market correction phase.
 
30- 55 years (middle-aged investors) 
 
Middle-aged investors between 30 and 55 years are also known as ‘sandwich generation’ as they have to simultaneously take care of their children and aging parents. Additionally, they also have to set aside a sizable portion of their income for servicing EMIs and to save for various lifestyle-related financial goals. 

However, post-retirement investment should be accorded top priority even by those having stagnant or lower savings rate. Those having higher savings rates than younger years should try to increase their monthly SIPs for retirement corpus, to be on the safer side.
 
Middle age investors should avoid compromising their retirement investments for building their wards’ education corpus. They can avail education loan for funding their wards’ higher education, which can be repaid by their ward themselves after securing employment. On the other hand, lenders avoid lending for meeting ones post-retirement expenses.
 
Investors should also maintain adequate emergency fund to avoid disturbing their retirement corpus during financial emergencies, especially during market corrections or bearish market phase. They should also avoid using their retirement corpus to prepay home loan and other secured loans. The average returns generated by retirement investments in equity mutual funds over the long term would in most likelihood be higher than secured loan interest rates.
 
55 years & above (old investors) 
 
People approaching their retirement are mostly advised to liquidate their equity investments for debt mutual funds and other fixed income instruments by the time they reach their retirement age. The rationale is to safeguard the retirement corpus from market volatility. However, a total switch to fixed income instruments would increase the risk of exhausting the entire corpus in their lifetime. While fixed income instruments rarely beat inflation rates, increasing life expectancy and higher health care expenses would further hasten the depletion of their retirement corpus.
 
Instead of shifting their entire equity fund portfolio to debt funds and fixed income instruments, investors should adopt a more steadier approach by first estimating their expected annual expenditures in their post-retirement years. Then start transferring amount each year to debt funds and other fixed income assets once they are 2-3 years away from their retirement age. This will maintain a significant equity exposure during their post-retirement years, which in turn will ensure higher inflation-adjusted growth for their retirement corpus and reduce the risk of exhausting it in their lifetime.