The maxim 'One size doesn't fit all' is true even for retirement planning. Every retirement plan is unique based on an interplay of several factors like the retirement age, goals, investment horizon, and current lifestyle.
What are the key building blocks to creating a retirement strategy? You are in the right place to find out!
Expected Retirement Age and Investment Horizon
Your current age, expected retirement age, and horizon build the primary groundwork for your retirement strategy. For example, a 30-year-old investor wants to retire at the age of 65. In this case, the investment horizon is 35 years.
Risk-taking Ability
With more years until retirement, an investor would have the appetite to invest in riskier assets like equities that have the potential to beat inflation. If the duration is shorter, the approach could be conservative with an emphasis on reasonable stability of income.
Current Financial Situation
Assessing your ongoing expenses, current lifestyle, and payable loans is crucial to gauge how much you need to save for your retirement bucket list.
Retirement Spending Needs
When planning for retirement, it is imperative to account for expenses such as housing, healthcare, travel, and other contingencies. Determining your retirement spending needs and the potential sources of income to meet your goals is instrumental to designing a realistic budget for retirement.
Asset Allocation Strategy
The real returns earned from an investment could be much lower than anticipated due to inflationary pressures. Hence, after evaluating your investment goals, horizon, liquidity needs, and risk-return appetite, you can seek guidance from an asset allocator to make an informed investment decision.
FAQs
You may consider the below steps to plan for your retirement and achieve your financial goals:
- Set a target retirement age
- Identify your retirement goals
- Calculate the amount you will need to meet these goals. Factor inflation into the calculation
- Invest in the right retirement plan that can help you stay financially prepared to meet your post-retirement goals.
Retirement for everyone is different. This is why, the money you need for your retirement depends on various factors like:
- Your retirement age
- Your health and lifestyle
- Any loans or liabilities
- The retirement goals you may have
- Any commitments you may have to fulfil
We can help you find out the amount you may require to invest to maintain your life during retirement with our retirement calculator. Just answer a few basic questions on your income, age, the number of years till you want to retire, your current retirement savings, if any, etc.
Not thinking ahead can hamper your retirement. Some of the decisions like quitting your job before checking on your retirement-plan vesting status, not saving or planning, not maxing out employer matching funds, investment mistakes and poor tax planning can impact your retirement.
You should start planning for your retirement as early as possible. Investing early offers more time for your money to grow and chances to earn higher returns. This helps you stay financially prepared for your post-retirement needs.The amount you need to save for retirement depends on your post-retirement goals. You may want to travel, buy a house, start a new venture and more. You would also want to continue your current lifestyle after retirement and meet medical expenses. Basis these, you can calculate the amount you will need during your retirement. Do not forget to factor inflation into this calculation. Once you have calculated the amount you will need for your retirement, you will be able to calculate the amount you need to save now to stay financially independent during retirement.
