This piece is not to introduce the various retirement schemes available for all to choose from. The idea here is to look at the ways in which one can make life after full-time employment free of financial worries. One concern dogging most people is working until retirement age and then not being healthy enough to enjoy life thereafter. Which harks back to the bottom line — should one plan to retire early and if so, how to save enough to be able to do so. Experts say the trick is in finding the right balance between working and saving. The first rule, of course, is to start early.
The earlier one starts saving for the rainy days, the bigger one’s savings will be. Once you have a decent corpus, it is also easy to build on that savings. Another advantage of beginning early is you start earning interest sooner, helping your money grow faster. Automating your savings can make a big difference to your corpus. The obvious advantage is that you don’t need to spend time on depositing a fixed sum at regular intervals. Recurring deposits, through whose interest income is taxable (latest Budget has made it exempt for senior citizens), offer the convenience of automatic deduction of a fixed amount from your bank account for a fixed tenure. Most people are averse to taking to automatic savings because of a mental block.
There are people who are a bit nervous seeing their bank accounts empty as soon as salary is credited. Some of these may be genuine concerns but there are ways tackle them. One way is to park a part of the money you can spare for investments, towards unavoidable unplanned expenses. If the expenses don’t happen by the time your next salary comes, simply go ahead and top up your regular investment. This way, you will be making a differed investment but that’s still better than not investing at all. Over time, you may get a grip of how much of your investable amount you need to hold. What is key is that you be in control of your finances. The main advantage of automating savings is it helps you curtail unnecessary spending and learn how to live within a budget. You may need to raise your investments periodically.
If you just got a pay hike, you may consider giving your monthly contribution towards investments a raise, too. Also, your priorities for postretirement life may change. For example, you may want to be your own boss after retirement. In which case, review carefully if the savings are good enough to start a business at a later date. If it’s not falling short, try to boost your contribution. None of these suggestions is set in stone. But as they say, saving is not a technique, it’s a habit we all need to develop.
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