Retirement Planning

This Presentation will provide you all the information you need to know about Retirement Planning

1. RETIREMENT PLANNING

2. A goal that cannot be compromised on. RETIREMENT

3. What is retirement? In simple words, 'Retirement' is when a person resigns from work as he/she has reached the age of 60 years or even more.  After working hard and slogging, just to make ends meet for their families and give them a comfortable life, retirement is what most people wait for.  To live a happy retired life, you have to make your hard earned money work for you.

4. How should you plan for retirement? Retirement planning is nothing but using your money earned, to provide funds for you at retirement.  At retirement, you may have specific goals that you need to achieve.  You may want to take an expensive vacation after retirement. So for all of the above, planning is required. If you are not sure yourself, then seek an adviser's help.

5. Have you planned for your retirement? You'll be shocked to know the corpus, you'll require at retirement. People think that as they get older, their salary will increase too, so they do not need to plan for retirement. What they don't realize is that, after retirement, they wont be working. Inflation and living longer are the  2 main factors that you need to keep in mind, because it could affect your retirement corpus majorly.

6.   Pick your retirement corpus. Let us see the different retirement baskets required, as per the different household expenses Monthly expenses at retirement age 60 years are Rs. 20000/-, Rs. 40000/-, Rs. 60000/- and Rs. 80000/-  Let us assume inflation at 5%, Rate at which you are going to invest the corpus will be 8% Need it for 30 years of retirement. Assume the current age to be 30 years.

7. MONTHLY EXPENSES FUTURE VALUE ( AT AGE 60, RETIREMENT CORPUS) PRESENT VALUE (AT AGE 30, INVESTMENT NEEDED ) Rs. 20000/- 4866019 483572 Rs. 40000/- 9732039 967144 Rs. 60000/- 14598058 1450716 Rs. 80000/- 19464077 1934288

8. Explanation All these monthly expense values are taken at the time of retirement. The future value of each expense is inflation adjusted. It indicates the total corpus required for 30 years.  The present value indicates the investment required today, to achieve the desired retirement corpus.

9. How to pick your investment avenues? Since retirement is a goal that you cannot compromise on, you have to plan it properly: If you are young, you have the capacity to take risks, so you can start of with SIPs. As you grow older, i.e. is middle aged, you can shift it to a balanced fund. When you have 10 or 5 years left to retirement, shift the corpus to debt. That way you are not compromising the funds for your goal.

10. What are your investment options? Public Provident Fund:  This fund has a minimum deposit of Rs. 500/- and a maximum of Rs 150000/-. The investment made, income earned and maturity amount is tax free. It has a 15 year lock in period, with an extension for a block of 5 years. The current rate is 8.7%. Partial withdrawal is allowed in the 7th year, under certain conditions.

11. Systematic Investment Plans in equity funds:  commonly know as SIPs. It is a good way of starting to save for retirement, due to its Power of Compounding. The earlier you start with  SIPs and the longer it is kept, the better returns it gives. After a year, the income earned is tax free. Debt funds:  These are the safer options available, as they are less risky compared to equity. These investments provide fixed income, that is why they carry less risk. Just before retirement, you can shift your investments to debt funds, to keep them safe.

12. Annuity plans:  This is another good option available. You can invest a lump sum and receive a monthly, quarterly or yearly annuity. So you have money coming in to take care of your needs. There are different types of annuity plans, like fixed annuity, variable annuity, etc. Senior Citizen Saving Scheme:  Any citizen of age years or more can open this account. You can open an individual account or a joint account with your spouse. Minimum amount is  Rs. 1000/- and maximum is Rs. 1500000/-. It has a lock in for 5 years and can be extended for a period of 3 years. The interest rate is currently at 9.3%. Premature withdrawal is allowed, but subject to conditions.

13. Conclusion Though people may think that retirement is not something to think about, when you've just started working, but I'm sure after looking at the figures required, you're having second thoughts. Well you should! Because you have to face the fact, that you can't work all your life. You are going to reach the retirement stage, one day or the other. So plan well and live a happy retired life.

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