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How to plan for your Retirement?
If you are in young, retirement may be the last thing on your mind. But if you think you have a long way to go for to plan for retirement, think again.

It is never too early to prepare for retirement, especially if you want to maintain the same standard of living that you would have got accustomed to by then.

Let us take a hypothetical example. Let's assume that you are a 35 year old, earning Rs.3 lakh per annum. Your salary grows at 5% per annum and you plan to retire after 25 years. Under these circumstances, assuming your post-retirement requirement would be 60% of your last annual income (Rs.10 lakh approx); you would need about Rs.6 lakh per annum after retirement. To achieve this, you need a retirement corpus of Rs.75 lakh assuming you earn a return of 5% per annum over a period of 20 years. To meet this goal, you would have to invest more than Rs.9, 000 per month at 7% per annum for the next 25 years. Inflation and tax implications have not been considered for simplicity.

Steps for making Retirement a Success
People have different plans for retired life. For example you may think of retirement as a time to relax, to laze around, to spend more time with family, travel or write a masterpiece.

Attaining financial independence after retirement will not be just a dream if the following steps are followed with steady discipline, perseverance and if smart investment strategies.

Start saving early
Nobody takes retirement seriously. But the fact is that even a small sum of money saved regularly and invested regularly makes a big amount which will come in very handy after retirement. One should not believe that after retirement, one can place all savings into income generating investment and spend rest of life in happiness. If you don't plan early, you couldn’t end up eroding your principal savings in order to have to supplement your monthly income.

The key to a financially independent future is "sooner the better". Cautious investors believe in this principal and plan their retirement accordingly. They not only save, they save early and regularly. . The catch is to make the power of compounding work one's benefit.

Retirement should be your top priority

Retirement should be kept as a top priority because if one does not keep it at the top one might end up depending on one's children, which probably no one would relish.

Create a Retirement Plan

Develop a plan for saving based on your requirements at the time of retirement. The goals you keep for saving depend on your lifestyle but you will need at least about 66% of your pre-retirement income to maintain your standard of living when you stop working.

Understand your pension plan
If your employer offers on pension plan, understand carefully your benefit level, financial stability of plan and the vesting period. Use retirement plans even if you already have enough money.

With retirement plans your money grows in a tax efficient manner and compounding interest over time makes it one of the best investment options.

Balance your risk tolerance and your investment strategy
Evaluate your risk profile and then balance your investment strategy to invest in various avenues to get the most out of your retirement money keeping your risk profile unhampered.

Diversify your investments & allocate your assets carefully
Depending on your work profile divide your savings into equity, bonds, Mutual Funds, and other investment avenues. Don't invest too heavily in one sector or one company, since the risk associated with putting all your eggs in one basket is indeed very high.

Save and Invest Regularly
Saving and investing regularly makes a big difference at the time of retirement. Investing at regular intervals builds your retirement fund over time and helps you to minimize risk and gives a tension free retirement-a time to pursue your hobbies, fulfill your dreams and passions.

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