When it comes to retirement planning, one of the most common pieces of advice you will come across is to start planning it as early in life as possible. But apart from starting early, it is equally important to keep adjusting the retirement plan according to your age.
While the goal is always to live a financially independent retirement life, factors like risk appetite, priorities, income, expenses, etc., keep changing as we age. All these changes should be considered to fine-tune the retirement plan and ensure that it delivers the expected financial security.
Here are a few recommendations that can help create an age-based retirement plan-
Start Small in Your 20s
Once you start working, the newly gained financial freedom can make you lose sight of your long-term goals. But the 20s are the best time to start saving for your retirement and let compounding work its magic. As you are young, you can be a bit aggressive with your approach. Consider options such as equity mutual funds, direct stock investments, and ULIPs to begin your retirement plan.
20s are also great for purchasing health insurance and life insurance as the premiums are on the lower side when you are young.
Contribute More in Your 30s
You might be married and planning to start a family by the time you are in your 30s. As the responsibilities will increase, it’d help if you start getting serious about your long-term objectives. While it can be challenging, you should try to save and invest more for your retirement.
If you want to take a loan like a home loan or car loan, ensure that you can easily afford the monthly EMIs after all the basic expenses and investments.
Be a Savvy Decision-Maker in Your 40s
Responsibilities like a child’s higher education and the healthcare of ageing parents can impact your retirement planning in the 40s. Even when the present financial needs can be cumbersome, it’d help if you continue sticking to your long-term retirement plan.
There are several smart moves that you can take to ensure that the present conditions do not significantly impact your financial health. For instance, you can consider a family floater health plan and add your family to your health insurance plan. With this plan, the entire family can share the health coverage.
Safer Bets in Your 50s
Now that you are very close to retiring, it can be the time to switch from your aggressive bets to safer investments. For instance, if you’ve selected an equity fund for your ULIP, change it to a debt fund that is not as volatile. Focus on investments that deliver limited but risk-free returns.
If you are a salaried employee, your income would mostly peak in the early 50s. Try to repay your home loan at the earliest so that you don’t carry any obligations into your retirement.
The Age-Wise Approach to Retirement Planning
Every individual would like to retire early and live the retirement of their dreams. But it requires smart planning and dedication to actually achieve it. As our lives keep changing, a retirement plan built around age provides the flexibility that most static strategies lack.
The age-based strategy provides you with the opportunity to adjust the retirement plan as per the current conditions while never losing sight of the long-term objective. Professional assistance from a financial advisor can also be considered for creating a customized retirement plan as per your needs and expectations.
