Financial experts strongly advise that planning for retirement should begin as soon as you start earning. However, many overlook this crucial step, often underestimating the potential financial difficulties that could arise post-retirement.
The longer you delay, the more you risk falling short of your retirement goals. The relentless march of inflation further underscores the need for early planning.
It’s also not guaranteed that your children will support you in your old age, making it even more crucial to be financially prepared for retirement.
Therefore, it’s essential to start saving early. It’s a long-term goal, and earlier savings lead to better outcomes. Delayed planning may result in lower returns, and the post-retirement life may not meet your expectations.
Here are some ways to save:
Employees Provident Fund (EPF): This is available to all employed individuals, with the employee and the employer contributing. However, the EPF alone may not be sufficient for retirement, so exploring other options is essential.
Mutual Funds: Mutual funds are among the best options for achieving long-term financial goals. Monthly SIPs or lump sum investments can yield good profits over time.
National Pension System (NPS): This government scheme is open to individuals aged 18 to 70. It provides pension benefits and tax exemptions under sections 80C and 80CCD (1B).
Public Provident Fund (PPF): A PPF account can be opened in a post office or a public sector bank. The current interest rate is over 7 percent. The initial term of the account is 15 years, extendable by another five years.
The following discipline and measures are necessary to ensure financial security in retirement:
- Maintain discipline in saving and refrain from withdrawing savings except in mandatory situations.
- Build an emergency fund equivalent to at least six months of expenses to avoid dipping into investments.
- Begin investing early for better long-term returns.
- Diversify savings to mitigate risks. Regularly monitor the portfolio and make necessary changes.
- Ensure property ownership and take out insurance at a young age for more excellent protection at a lower premium.