With more and more women now getting a higher education and joining the Indian workforce, it is high time that women too start understanding the basics of how to plan their retirement. The expert tips discussed in this post can help you begin.
Planning retirement is something that is generally associated with men. But thanks to the current trend which aims to reduce the gender differences, women too now significantly contribute to the Indian workforce. More and more females are now getting a higher education and have corporate dreams.
This also means that retirement is no longer a male-dominated world. Working women, too, should start planning their retirement as early in life as possible to enjoy a financially stable retirement. Here are a few tips to help you begin-
- Consider the Total Number of Years to Retirement
The first step for creating an effective retirement plan is to have a clear idea about how many years do you have for your retirement. Consider your current age and the age when you’d like to retire for laying the foundation of your retirement plan. The total number of years remaining for your retirement will directly impact the risk-bearing capacity of your portfolio.
For instance, if you have more than 25 years for retirement, you can aim for creating a portfolio where most of the investments are made in equity. While equity investments come with a high level of risk, they outperform every other asset class in the long run. If you have less than 15-20 years, invest more in debt-related securities.
- Focus on Your Retirement Goals
Apart from the duration, it is also imperative to know what you’d like to do after your retirement. The value of your portfolio should be adequate to accommodate your post-retirement expenses. For instance, a lot of women dream of pursuing a hobby or start a small business after retirement. Then there are other women who dream of living a quiet and happy life with their family after retirement.
Try to get an approximate idea of your monthly expenses after retirement. This will help you understand how much you need to save and invest now to generate returns that would be adequate for your retirement goals.
- Make Smart Purchases
Now that you have a basic idea about your retirement plan, it is time to start making some smart purchases. Health insurance and life insurance are two of the most critical products for yours, as well as your family’s financial wellbeing. The younger you are when you purchase these products, the higher will be the benefits they offer in the longer run.
Similarly, you can also start investing in a pension plan at a young age. By regularly investing a small part of your current income in one such plan, you can pave the path for receiving a fixed income even after you retire.
- Repay Loans
It is not a wise idea to continue repaying loans even after retirement. If possible, you should try to repay all the loans, like home loan, car loan, and personal loan that you might have taken individually or with your spouse at least a few years before you retire.
While it is now very easy to get a loan, repayment is generally long and tiring. So, make sure that you have a solid repayment plan even before you apply for the loan. You can work along with your spouse to try and repay the loans as quickly as possible.
- Never Forget the Taxes
The tax burden will mostly remain even after you retire. The IT department taxes the returns from most of the investments. So, while working on your retirement plan, ensure that you calculate things based on the post-tax returns.
Consult a tax professional to know the different ways in which you can save taxes before and after retirement. There are several provisions under IT laws that can help you save taxes. Professional guidance can help you make the best use of such provisions.
Living the Retirement of Your Dreams
It is essential to start your retirement planning right from when you are in your 20s and 30s. This will provide you with more time to save, invest, make mistakes, and improve your money management skills. Moreover, time plays a vital role in most investments, and starting early is sure to provide you with a solid foundation for building a successful retirement.
Start with the tips discussed in this post, and you will be well on your way to creating a retirement plan that can help you live the retirement of your dreams.