Experts say that for a better life after retirement, it is important to take care of two things – investment and planning for retirement and efficient withdrawal planning from retirement funds.
Retirement Planning: When it comes to retirement planning, not many people give it importance. The sooner you prepare for your retirement, the better it will be for your future. Many people think that retirement planning should be done by those who are nearing retirement or whose age is around sixty years, but thinking like this is not entirely correct. Retirement is a new journey of life. How your life will be after retirement depends on how you plan for it.
Anoop Bansal, Chief Business Officer, Scripbox says, “For a better life after retirement, there are two things to keep in mind – investing and planning for retirement and efficient withdrawal planning from retirement funds.
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Investment and retirement planning
It is always better to start investing and saving for your retirement from an early age, that is, once you start earning, you should also start saving. According to industry experts, you can build a huge corpus in the long run by investing a small amount regularly. Bansal explains, “While investing, you should calculate your (inflation-adjusted) expenses at the time of retirement on the basis of inflation. However, as retirement approaches, you can get an accurate estimate of inflation based on the expenses required to maintain your lifestyle.
Experts say that you must consider inflation while planning your retirement. India’s annual inflation rate in May 2022 was 7.04 percent. You can use historical numbers to plan accordingly and keep revising it as the years go by. Bansal further said, “You should keep in mind whether where you are investing helps you to get returns equal to or more than inflation.”
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Withdrawal planning from the fund after retirement
Once you retire, the ultimate goal of your investment fund is to provide you with a regular income. However, it is also important to consider the rate at which the funds should be withdrawn. Bansal explains, “Withdrawal rate is directly linked to your income requirement. In general, a 4 per cent withdrawal rate is considered ideal. It is also called the 4 percent rule of retirement.
You can also opt for a Systematic Withdrawal Plan (SWP) so that you can ensure an efficient way of withdrawing money from your retirement corpus. Bansal explains, “Not only will you enjoy regular income with this, but your remaining fund stays invested and keeps growing and gives returns. You should calculate the lifestyle expenses of your post-retirement life and take the right decision on the withdrawal rate to avoid any hassle.
(Priyadarshini Majhi)
www.financialexpress.com
