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Why Retirement Planning Is More Important Than You Think

Why Retirement Planning Is More Important Than You Think

Retirement is one of those inevitable phases of life, which marks the end of our careers that we have built over the years by acquiring skills and constant hard work.  Assignments, deadlines, meetings etc. soon get replaced by holidays, pursuing new hobbies, and spending more time with family. While some people look forward to this relaxed and stress-free life post retirement, some get worried about the loss of a steady source of income.

If you do not prepare yourself financially, retirement can be quite depressing for you and your family. Retirement is a time when income drops and expenses rise. So, financial planning is required for leading a financially independent life even after retirement.

Financial planning simply refers to saving up money for the future. A number of people start saving for retirement without knowing how much they will need to maintain their standard of living after retirement.

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So, if you have already started your retirement plan, ask yourself one simple question,“Am I saving enough for my retirement?”

In order to beat inflation, both savings and investments are very important

Inflation is the general increase in the price of goods and services. As years pass by, inflation eats away at the value of your money. In order to beat inflation, you need to not just save but invest as well.

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The following are three basic rules of thumb for a successful retirement plan!

1. Start Early

The earlier you start saving for the future, the more money you will have in retirement.The more you procrastinate on your retirement planning, the more money you will have to contribute in order to achieve your retirement goal.

Another advantage of starting early is that you can take risks in your investments. Equities, for example, are risky but it may offer a very high return on your investment. If you want higher return from equities, you may need to stay invested for as long as possible.

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2. Invest in Various Avenues

There are many different investment avenues that can help you grow your money. Mutual funds offer high rates of return on investment, though it requires constant market monitoring to keep your money safe.  ULIPs or Unit linked Insurance Plans may be good investment products as they offer the dual benefit of investment and insurance. Also look into investing in real estate, which can still provide you a steady check while retired.

 3. Stay Invested

(This has been mentioned but needs to be explained further because of how important it is.)

Have patience and stay invested.

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Equity investors, for example, may lose faith in their investments as the initial return often looks disappointing. But if they stay invested for a longer period of time, equities usually offer a high return.

Unit-linked pension plans can be best for successful retirement planning. These plans allow you to choose from various fund options based on your risk appetite. Based on market fluctuations, you can switch and redirect your funds. You may be able to choose to pay your premiums on a monthly, quarterly, half-yearly or yearly basis. It will allow you to make investments in a systematic manner over a long period of time for higher returns. In case of your untimely death, your loved ones may be able to receive the the benefits.

Another advantage of a pension plan is that it offers income tax benefits both as the premium and the maturity proceeds. This can be your incentive to stay invested for as long as you earn and are liable to pay taxes.

To Wrap Up!

Retirement is an important milestone in life. Retirement planning, therefore, is a process that should not be left for the later stages of your life. The key to a successful retirement plan is to evaluate your retirement needs, set a financial goal, start early, stick to the plan, and, last but not least, go for products that will not only help you achieve your targeted goal but also protect your money from the volatility of the market.

Featured photo credit: Pixabay via pixabay.com

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George Olufemi O

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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