Overcoming with your 5 Biggest Retirement Challenges

One major mistake which a lot of individuals do with retirement is that they take it lightly. And even if one thinks of building a retirement corpus, they find making a plan of action for achieving the same a boring and tedious task. Your savings are your assets but their value tends to decrease with time, all because of inflation. Hence, investors must learn who to convert these assets into regular income rather than letting them sit idle in their savings account.

How much is too much?

Several people want to retire early, say by the age of 45. But they do not have the answer to this simple question, “Do I have enough money in my account so that I can retire and lead a stress-free life without any financial liabilities?” This is a tough question because how much corpus is sufficient corpus is something that every individual finds difficult to determine.

Investors can use this thumb rule to plan for their retirement corpus. If an individual spends Rs 25000 currently and is expected to live 30 years into retirement, then the need to have a minimum retirement corpus of 25000 x 12 x 30 = Rs 90 Lacs.

What about inflation?

Now you may argue that we were earlier speaking of inflation, but we haven’t taken that into consideration for the retirement corpus. What we would like to counter-argue is that as a retiree you are not going to spend all the Rs 90 Lacs overnight, so you can smartly choose to invest the majority of the sum that you won’t be needing so that over time it grows in value and so does your retirement corpus.

What about a medical emergency?

Yes, we were just coming to that. Now it is obvious that although we hope to live a fit life till our last breath, there can be times when you may have to shell out a large chunk of your savings to tackle life’s unforeseen exigency. In such a scenario, touching your retirement corpus may seem like the only option. However, you can smoothly glide over such medical emergencies smoothly if you have built an emergency corpus. Please reserve a certain portion of your savings in a liquid mutual fund so that you can instantly redeem your fund units and pay for any medical emergency.

Where to invest for building a retirement corpus?

If your employer already has an EPF account for you, then you are automatically saving a portion of your income in a debt retirement scheme. If you really want to build a decent corpus with your money, then you can consider investing in a retirement savings mutual fund. Retirement mutual funds are essentially hybrid funds that invest in equity as well as debt related instruments. Depending on your risk appetite you can invest either in a retirement plan that is more equity oriented or debt oriented. These types of schemes have the potential to outperform every other type of traditional retirement scheme and hence investors can target a solid retirement corpus through investments in these funds.

When to get serious about retirement?

Believe it or not but the best way to ensure that you are able to build a solid retirement corpus without having to stress too much is by starting as early as possible. You can start a monthly SIP in any retirement mutual fund of your choice and earn a decent corpus through systematic and disciplined investing.

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