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By diligently following these steps, the only thing you need to think is not when and how to retire, but how to rewire yourself post retirement.
Photograph: Chris Potter/Creative Commons
Retirement in today's dynamic work environment can happen sooner than imagined. Gone are the days, where the government funded pension funds were sufficient as a security blanket to lead a peaceful life after retirement. With a huge chunk of workforce being in the private sector, it has become imperative to start planning for retirement sooner than later.
After working for 40 or more hours per week for years, the thought of relaxing and leading a stress free life after retirement sounds too good to be true. And it may be practical, provided you have planned it well for it financially. Follow these steps if you wish to retire soon...
1. Save and invest wisely: Disciplined savings (about 20 per cent of your income) done month on month, and invested wisely in investments like real estate, stocks and mutual funds, gold, pension plans, etc. can yield and ensure a steady flow of income during your later years.
2. Plan to pay off your debts: High interest debts are more likely to sabotage your retirement savings, if you don't plan well. Also, housing loans usually are the long-term loans, which will take years to repay. If you plan well, you will be able to repay these loans by the time you retire, thus saving a big chunk of money for your post retirement living.
3. Refinance: Home loan interest rates are around 10.15 per cent. If you are paying significantly higher interest on your home loan, it makes sense to take a relook at it. You might save a huge chunk of money on the interest outgo.
4. Minimise lifestyle inflation: Retirement can last 20+ years these days. If you minimise lifestyle inflation, then you'll have more money to put towards retirement. In other words, be the 'Master of the Middle', wherein you are not in your extremes when it comes to spending.
5. Buy insurance: It's extremely important to protect yourself and your loved ones in case something happens. Ensure you buy a life and health insurance for yourself and dependents and pay the premium on time. It's also a good idea to make a will and update it whenever there is a significant life change.
6. Find alternate sources of income: Having diverse income streams is always better. This way if something goes wrong with one, you have others left.
7. Have a retirement plan: Defining a sense of purpose clearly, or keeping your to do list ready, makes the transition of working full time to doing your own stuff smooth. Happiness in retirement is a balance between staying active and staying relaxed.
The concept of retirement is undergoing a makeover these days, with more and more people wanting to do stuff on their own terms, while continuing to work. By diligently following the steps explained above, the only thing one needs to think is not when and how to retire, but how to rewire oneself post retirement.
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.
