While we are working, we have income and can lead our life smoothly. We can manage our expenses with the regular income we get from our employment or business. Did you think ever that once you must retire from your service or business? How can you survive that time without having a regular income? Need of a complete retirement planning starts here. How can you plan your retirement when you are working? A good portion of employees and business people could not meet all their financial needs with their regular income they earn. In such a situation how could they put of a certain percentage of their income for retirement plan? Following tips help you to plan your retirement while you are earning.
Spend carefully. You must know your expenses including daily household expenses. You must have a control over your daily expenses. Make a budget and follow the budget strictly. Analyze your expenses and avoid unnecessary spending. Make a list of all your day to day expenses and know how much you spend for each item. Avoid all items which are not necessary. If you could avoid any such items, add that money to your saving. Remember the old proverb, “Little drops of water make a mighty ocean”.
Start a habit of saving. You may think that you do not have money to save after meeting all expenses, but, remember that, something is better than nothing. Just start a saving with whatever you can. Even if, it is an extremely small amount, do not worry. Start saving with this small amount and deposit it regularly. You can open a recurring deposit in a bank or post office, or in a Systematic Investment Plan (SIP), in any mutual fund scheme. The main thing is that you must save regularly, and this regular saving will grow with the power of compound interest and cumulative growth.
Reduce you tax liability. This is another valuable thing that you can add with your retirement plan. Government allows certain tax exempted investments. Some significant investments can deduct from total income while calculating your income tax liability. For example, employees provident fund (EPF), Public Provident Fund (PPF), 401K etc. This investment can be considered as compulsory investments so that you can reduce your tax expenses and at the same time you can earn interest, dividend or growth from such investments. Earnings from some tax saving schemes are tax free.
Keep a healthy habit. Keeping healthy and hygienic habit will reduce your medical bills and medical insurance cost. Include seasonal vegetables and nutrients in your food, which can keep you healthy, and reduce your household expenses. Do daily exercise or walking keeps you healthy one. Avoid costly food materials which may harm you and your wallet at the same time.
Use public transport. Public transport system is cheap, and you can switch over to public transport system, when you go for work if it is convenient. You can save fuel cost and maintenance cost of your vehicle. If the working place is not far away, you can use bicycle, which will good for your heath.
Always go for safe investment. Keep investing your retirement plan in any safe investment scheme such as bank fixed deposit, post office deposits or any such deposit scheme. If you invest in mutual funds, go for debt funds than volatile equity funds, because, this is your retirement savings. If you are a young age, you can also go for some risky investments.
Take adequate insurance. You need Proper insurance protection for your life and all possible financial loss. Proper insurance reduce the risk of a heavy money loss when there are any emergencies. Even if, we could not compensate the emotional side of the loss, we can solve our financial loss through such insurance protection.
Do not eat out your retirement plan. Avoid withdrawing you EPF account or such retirement plan when you want money. Touch those plans only when there are no other alternatives.
Invest the retirement money effectively. When you retire, accumulate all your retirement investments and invest them effectively. The main aim is that you should get maximum regular income from those investments. You can go for any reasonable annuity schemes or any appreciable fixed deposit or dividend schemes. Remember that the income must be certain and regular. You do not have more money to adjust, if the investment scheme fails and you may lose all you hard earned money.
I f you plan well you can lead a successful independent retirement life. Now I remember the famous advertisement of LIC of India, which is never bowing the head before others. Yes, you should not surrender before others even after retirement, if you plan your retirement well in advance.