One Day I Meet Mr.Ravi Age 25 in train we were talking about changing in trends and inflation which take place in last couple of year you will be shocking by knowing that around 8% of inflation arise in every equal year.so I asked him what he planed for its retirement but as same he also replied me that there is much time for keep though on retirement plan .after I made simple calculation by asking him its earning+ expense+ saving .but how much he was saving is enough for that period of time was not enough for its retirement. we was shocked after know actual amount how much he need to invest for retirement so that he can live same life how he is living now .
But what about saving?
Yes of course you must be saving but you exhaust those savings of yours in short term goals
For Eg: car, vacation, etc. So what about the long run, wouldn't you want to create a corpus for when you will stop earning,for
when you retire?
Your expenses don't end once you stop earning. So how would you manage your cash flows post retirement? For that you need to do your retirement planning diligently. Retirement planning safeguards your post retirement life ensuring you lead a stress free life and enjoy rather than worry about your finances. Your retirement goal which is mandatory can be met by your long term resources. So what is the wait for? All you have to do is plan diligently and smartly.
People save for retirement and think that it will be sufficient to get you through your retirement years but this is where you go wrong. There are many things you need to keep in mind and various mistakes you need to avoid while planning your retirement. In order for you to avoid these pitfalls we have today Mr. suresh telling us his story about his retirement planning and mistakes he made while he was doing it.
•So Mr. Suresh tells us that the biggest mistake that he made was starting with his retirement planning late i.e in his thirties. He kept procrastinating this thinking there is many years left for his retirement and so he kept using his savings for his other short term purposes instead of planning for his retirement. By the time he started thinking about his retirement he realized that in order to create the required corpus for his retirement he will have to save even more then what he would have to if he had started early saving and he even realized that his money wouldn't get enough time to grow.
•Well the other mistake that he made was not taking into account the inflation factor. He assumed that he will be spending the same amount few years down the line but what he ignored was that the money he is spending now will hold no worth in future as it will inflate approximately at 7%. Due to this he ended up spending more than originally planned and saved.
•Your EPF is what will give you financial protection after retirement but Mr. suresh made the mistake of withdrawing his EPF early on for emergency purposes. EPF is best kept for after retirement as it has the benefit of being tax free and the amount accumulated year on year will be huge. Withdrawal of EPF was the biggest setback he faced.
•As you get old your health issues also start increasing and so does your medical expense. Mr. suresh here says that he had an employer who provided him medical insurance and so he didn’t feel the need to invest in medical insurance. But once he retired the facility also ended. And now he has to spend a lot on baying all his medical bills. This could have been easily avoided if only he had invested inmedical insurance.
•Once Mr. suresh started his investment he did the wrong asset allocation. He chose to be conservative and avoided investing in equity and invested in fixed deposits. He couldn’t create a great corpus because the returns he got in fd’s were much less as compared to equity.
•Mr. suresh didn’t plan for any unforeseen emergencies and did not invest for the same. And then when faced with such emergencies a major chunk of whatever corpus he had created for retirement had to be utilized.
Well if you have read whatever is written above carefully I am sure you would have understood by now how the mistakes Mr. suresh made has affected his post retirement life in a severe way. Instead of being stress free and enjoying the retired life Mr. suresh is still busy struggling with his cash flows and managing his finances
Now the choice is yours learn from Mr. suresh mistakes and start planning your retirement wisely and early. If possible hiring a financial planner would change your life in a positive way.
