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Retirement might feel like a distant dream, but it’s something that requires planning from an early stage. The earlier you start, the easier it will be to achieve a secure and comfortable retirement. Retirement planning is a long-term journey that involves taking specific steps at every stage of life. By breaking the process into four main stages, you can stay on track and retire with confidence. Before retirement, we work for money, but after retirement, our money should work for us.

Stage 1: Building a strong foundation (Age 20–30)

Start early and let time work for you

In your 20s, you’re just beginning your career, and retirement may seem far away. But this is the perfect time to start planning. Even small investments made now can grow into a large fund over time. Thanks to the power of compounding with time value of money, the earlier you start, the more your money will grow.What you should do:

• Save consistently: Aim to save 10-15% of your monthly income.
• Start investing through SIPs: SIPs (Systematic Investment Plans) are a great way to invest small amounts regularly in mutual funds. They are easy to set up and allow your money to grow over time.
  
  
• Learn to budget and save: Create a simple budget, track your spending, and ensure you are saving and living within your means.
• Get term insurance and health coverage: It’s much cheaper when you’re younger, and it gives you a safety net in case of emergencies.

Stage 2: Growth and responsibility phase (Age 31–45)

Balancing family, work, and financial goals

In your 30s and 40s, life becomes busier. You might have a family, a mortgage, and children’s education to think about. With these added responsibilities, your income likely increases, but so do your expenses. Many people think it’s too early to plan for retirement at this stage. However, this is the best time to build your wealth for the future.

What you should do:

• Increase your SIPs: As your income grows, increase your monthly SIP investments.
• Build a Contingency fund: Set aside enough money to cover 6–12 months of living expenses. This will act as a safety net for unexpected situations.
• Invest in PPF, NPS, EPF, and mutual funds: These are great options for long-term savings. Each has its advantages and disadvantages — PPF and NPS offer tax benefits, while mutual funds have the potential for higher returns.
• Get health insurance: Make sure you and your family are covered by a good health insurance policy.
• Plan for your future goals: Start thinking about long-term goals like your children’s education, marriage, owning a house, and so on.

Stage 3: Peak earning years and serious planning (Age 46–60)

Maximising savings and protecting your wealth

By your late 40s and 50s, retirement is getting closer, and your career may be at its peak. However, it’s crucial to shift your focus towards making your money work for you and ensuring that you’re on track for a secure retirement.What you should do:

• Review your retirement savings: Take a close look at how much you’ve saved and whether you’re on track to meet your retirement goals.
• Shift to safer investments: As retirement nears, start moving some of your money into safer, low-risk investments such as PPF, NPS, or debt mutual funds.
• Invest in retirement-specific products: Consider investing in pension plans or annuities that will provide regular income after retirement.
• Ensure your health insurance is sufficient: As you age, healthcare costs tend to rise, so make sure you have comprehensive coverage.
• Avoid taking risky investments: At this stage, it’s better to avoid high-risk investments or large loans. Focus on preserving the wealth you’ve built.

SIP booster tip: Even in your 40s, continue your SIPs if possible. For example, investing ₹10,000 per month with an incremental 15% YOY as a step-up SIP for 20 years at a 12% return could give you over ₹3.02 crore for retirement. Delayed but not out of hand. It is a wake-up call for the 40s group.Stage 4: The retirement years (Age 60 and Beyond)

Living off your savings and enjoying retirement

Now that you’ve stopped earning a regular income, your goal is to manage your savings wisely and ensure your money lasts through retirement. At this stage, it’s about using your resources to provide a steady income and protecting your health.

What you should do:

• Shift to income-generating investments: Consider options like SWPs (Systematic Withdrawal Plans), annuities, or senior citizen savings schemes that provide regular monthly income.
• Prioritise comprehensive healthcare coverage: Continue to focus on maintaining good health insurance coverage.
• Avoid risky investments: At this stage, safety is more important than high returns, so choose low-risk investments.
• Keep some money liquid: Make sure you have easy access to some of your savings in case of emergencies. Bank MOD/Auto sweep account / Liquid fund are the best options.

Solutions to common retirement planning problems

1. Healthcare costs after 60: Medical costs can drain your savings if you’re unprepared.
   • Solution: Get senior citizen health insurance and set up a separate medical emergency fund.
2. Relying only on fixed deposits: Fixed deposits don’t usually keep up with inflation.
   • Solution: Diversify your investments into mutual funds, PPF, NPS, tax-free incomes, and annuities to get better returns.
3. Underestimating inflation: Inflation can drastically increase your expenses over time.
   • Solution: Keep part of your portfolio in equity/ hybrid mutual funds to outpace inflation.
4. Running out of money early: If you withdraw money too quickly or haven’t saved enough, you could run out of funds.
   • Solution: Stick to a monthly withdrawal plan and consult a financial advisor to make sure you don’t overspend.

If you’re starting late — don’t worry
Even if you’re in your 40s or 50s and haven’t started saving for retirement yet, it’s not too late. Here’s what you can do:

• Save aggressively: Cut unnecessary expenses and focus on saving more.
• Maximise investments in NPS, mutual funds, and senior citizen schemes: These options can help you catch up quickly.
• Consider working longer: If your health allows, working for a few more years can give you a better financial cushion.
• Generate rental income: If you own property, consider renting it out for additional income.

Retirement might seem like a distant event, but the earlier you start planning, the more peace of mind you’ll have when you reach your golden years. Whether you’re in your 20s or 50s, small steps taken today can lead to a financially secure tomorrow. It’s not just about saving money — it’s about ensuring you have the freedom to enjoy life on your terms.

Trinath Lenka CFP(Certified Financial Planner)
Managing Director: www.wallet4wealth.com
Email: trinath.lenka@wallet4welath.com
WhatsApp: 9238000131

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