Retirement is also known as the golden period. When an individual retires and stops working, it is their time to live a stress-free life. Your mid-30s are the right time to plan for your retirement. Even though some individuals may find planning about retirement too soon at this age, the earlier they start, the easier the transition will be. Planning in your 30s is realistic for having a secure retirement and avoiding any pitfalls at a later stage. Here is how you should invest and save when you are 35 and want to retire at 56:
Increase contributions towards your retirement
If you are an employed individual, increase the monthly contribution towards your Provident Fund (PF). If you are a self-employed individual, consider opening a National Pension Scheme (NPS) or a Public Provident Fund account. Use a retirement calculator to get an estimate of the funds you need to save and distribute them accordingly. These are non-risk investments that lock your money so you do not spend it. Individuals with a high-risk appetite also invest in mutual funds and Unit Linked Insurance Plans (ULIPs) with a view to your retirement. Aim to have a minimum of 15% of your monthly savings towards your retirement.
Control your expenditures
When you were young and barely had any responsibilities, reckless spending did not affect your finances adversely. However, over the years, it can add up. Try to save as much as you can towards your retirement age. It is not about living below the means but simply avoiding unnecessary spending so that you do not regret later. It is important to inculcate the right balance between saving and investing. This habit will help you immensely, even after your retirement.
Research and learn about different investments
When you are creating a pension plan, it is important to think about the different savings and investment options that are available. It is important that according to your goal; you take your investment, savings, and expenses into consideration. Planning effectively will significantly reduce your worry and ensure that you maintain a good risk-to-reward portfolio. Rather than investing all in equity or all in PPF-type funds, try to balance the two. Eventually, over the years, when you have collected a sufficient pool of funds, you can transfer all of it to a safe form of investment.
Have your own house
It is important that you have your own house before thinking about retirement. This is because having a home leaves you assured that you only have to take care of your everyday expenses and other goals after you reach your retirement age. If you have a loan, aim to pay it off before you retire. This is because, with the absence of an income, it can get difficult to pay off your loans. Having your own house offers a sense of security. It ensures that you do not have to worry about having a roof over your head after you retire.
Have the right life insurance and medical insurance plan in place
When you buy life insurance, you need to check the needs of your dependents along with your liabilities. You need to ensure that the cover is sufficient for your family to live a good quality of life in your absence. For health insurance, ensure that you buy one early to get the lowest premium possible. The last thing you want to worry about after retirement is medical and hospital bills. Also, if the tenure of your life insurance and health insurance is over 59 years of age, ensure that you have sufficient funds in your pension plan to pay the premiums.
Do not keep your money in the bank
Having your money in the bank offers liquidity but also leads to losing interest. Based on your financial goals and planning, ensure that you keep only the money you need for immediate spending in the bank. You can allocate the rest of the funds to different short-term and long-term investment plans. Use a retirement calculator to get an estimate of the funds you need and plan accordingly. If you are keeping the money as it is in the bank, you might end up spending it unnecessarily. Instead, if you invest the same amount, you can maximise your returns.
