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For anybody who needs Rs 50,000 per month to run his household today would require Rs. 2.87 lacs per month 25 years later to maintain the same life-style, if inflation is assumed at a very modest 7% per year. This comes to a requirement of Rs.34.44 lakhs per annum at that time. Now if one assumes to earn 8% returns post retirement for retired life of 30 years, he needs Rs.5.66 crores at the time of retirement, if no other income or expenses are considered except just meeting his monthly household expenditure to maintain the current life-style.

You need to plan for retirement because:

• Traditional avenues of savings are not sufficient to meet retirement expenses.
• Rising cost of living.
• With higher life expectancy, you need to provide for around 30 years of your retired life.
• Not all of us are covered under pension schemes. However, even for those likely to get a pension, with the Basic of pension fixed (DA may or may not increase), the pension’s real value will be about 50% approximately 8 years after retirement. 12-13 years later, the same pension may not meet even 1/3rd of your house-hold expenses.
• No social security system in India like in the USA.

Thus, retirement planning is compulsory for each of us if we want our post-retirement life to be as great as pre-retirement life.

How do you plan for your Retirement? Remember – the best time to plant a tree was 30 years back; the next best time is NOW! Depends a great deal on what is your life-stage now. Follow the links below to reach the section relevant to you:

• Planning in Early Years of Service (22-35 Years of Age)
• Planning in Later Years of Service (36-50 Years of Age)
• Planning When You Are Just About Retiring or Already Retired

Planning in Early Years of Service (22-35 Years of Age)

A question uppermost in the minds of individuals is when should they start planning for retirement? The answer to this is simple – start planning now if you haven’t started already. Over here, we have outlined when and how one should start planning for retirement.

When do I want to retire?

An individual wishing to plan for his retirement should first know when he wants to retire. This will help him assess the number of years he has left to save for retirement and also allows for a more systematic and disciplined approach towards his planning. In case it is not very clear right now, It is alright – additional planning will always stand you in good stead.

Target savings for retirement

This is the most important factor that one needs to consider in his retirement plan. A person should first assess how much he would need post-retirement. This decision is very important and is dependent on several factors like whether he wants to start a small business after retirement, his dependants (wife/parents) and their expenses, child’s marriage or education, inflation, etc.

Start planning early

Never postpone planning for your retirement, start at the earliest. The earlier one starts saving for retirement, the higher is his return on investment. The power of compounding works even more wonderfully if you start early and a few years’ delay could make a lot of difference to your savings. If you are contemplating a life insurance policy, Term Insurance is the way to go and a head start works out far cheaper. Taking an insurance policy at an age of 25 years will be cheaper than taking it at the age of 30 years.