‘Start your retirement planning from day one’
Magazines scream this line, elders teach us this idea, and so do our friends who are a year or two into the workforce.
While making a retirement plan and thinking about your future is vital; sometimes it can feel too heavy and confusing. Should I invest in equities or not? How much to save? Will I retire with no money? The questions can keep us awake all night.
Do no fret, retirement planning is not rocket science and can be made simple and effective. Here are five steps to start with.
- Set Your Goals
Before you pull out that retirement planning calculator, graphs, and spreadsheets; you need to take a plain piece of paper ad write down your goals.
You need to dig deep for this one. Ask all the questions that matter.
- At what age do you plan to retire?
- What lifestyle do you wish to lead in retirement?
- How do you plan to have the money to lead such a lifestyle?
- Where do you want to retire?
- Are you on the path to meet these goals?
- If no, what do you plan to do?
Yes, one word which can help you forever. You can mint a million dollars each year but without any savings, you aren’t setting yourself up for a comfortable retirement.
When you get your salary, pay the bills, get the necessities, and what’s left after that, spend. The more savings you have, the more happy and healthy you are. Excellent savings are hallmarks of an excellent retirement plan.
- Take Care Of Your Investment Portfolio
When you are young, there is the energy and zeal to invest and become millionaires. Keeping Warren Buffet in mind, many people begin to trade but often forget his timeless advice and quotes.
Never overexpose yourself. Always diversify your portfolio with a mix of mutual funds, equities, exchange-traded funds, and government sponsored securities. You get to grow your wealth without taking on a lot of risk. Use your retirement planning calculator to check your risk tolerance vis-a-vis your retirement goals. Keep it simple, always.
- Create a directory
One common scene among youngsters is running Helter Skelter finding documents and files. The retirement plan file is somewhere, term insurance document is missing and other similar scenes.
One of the key rules to ease into a comfortable retirement is having all documents and files in one place. Create a master file and store all documents in that file and nowhere else.
- Go Digital
We live in the information age and by the time we retire, the world will undergo drastic changes. The only way to survive is to adapt. Going digital is helpful in retirement planning.
Today, you can purchase life insurance, invest in stocks, and file claims online with a few taps on your smartphone. Going digital means lower premiums, instant service, and less clutter.
As you grow old, being in sync with technology will help you stay ahead of your peers.
Retirement planning can scare a lot of people. It does not have to. With a few simple steps like the ones above, you can simplify your planning and grow old as someone who has it under control.