Retirement Planning: Tips to follow if your retirement funds are falling short of target

Retirement planning is important to deal with the challenges that come with market uncertainties, inflation and fluctuation in interest rates. These factors could impact your return on investment and the retirement corpus you generate may not be enough to meet your financial needs post retirement.

Retirement planning helps you to evaluate various factors and savings instruments before the actual investment starts. A meticulous planning can ensure estimating an appropriate retirement corpus fund. Without planning, the retirement funds could be way lesser than expectations and hence, bridging the gap becomes extremely important.

So, how can you do so? Well, we have got you covered!

Tips to follow if your retirement funds are falling short of expectations

Here are a few tips to follow if your retirement funds are falling short of expectations.

Invest wisely: A proper and thoughtful analysis is required before making any investment and the same applies for retirement planning. So, explore all possible options, shortlist the ones that match your needs efficiently and formulate an investment strategy accordingly. You can continue investing even after retirement using the returns generated to get the most out of it.

Consider tax saving instruments: You can save more by using the tax exemptions that come with saving in accounts like Public Provident Fund (PPF), Employees' Provident Fund (EPF) and National Pension System (NPS). In addition, if you have invested in plans like the guaranteed savings plan or guaranteed income plan, you can claim tax deductions as mentioned in the Section 80C of the Income Tax Act.

Diversification of investments: Relying on one source of income or investment after retirement can be detrimental as inflation might affect your quality of life. Therefore, try diversifying your investment portfolio to manage risks and protect your investment against the inflationary pressure. It’s ideal to invest in multiple investment instruments like mutual funds, life insurance, bonds and fixed deposits, among others.

Balance with low-risk investments: Investing in fixed deposits (FDs) or PPFs can be a low-risk avenue with lower returns. On the other hand, investing in equity or mutual funds could provide higher returns but they come with high risks. If you are looking for a steady growth and secure return, it’s always better to choose more low-risk investment options.  

Work after retirement: You can choose to work after retirement as well by pursuing your passion or considering freelance opportunities. In addition, social media is a great source for generating passive income by posting content over various platforms. If your retirement funds aren't adequate, keep investing after retirement as well and don't repeat the past mistakes.

Reduce expenses: In order to manage your expenses with limited sources of retirement income, cut your expenses. You can do so by identifying the unnecessary expenditures and reducing your regular expenses. In addition, you can try finding affordable alternatives to expensive items that you can't sacrifice on.