The other day one of my colleagues asked me – “I am 51, is it the right time to start retirement planning? Am I too late?” The question forced me to think about how nifty late starters should act when it comes to their retirement planning.
Considering all the basics of personal finance, and investing regularly in order to build a huge corpus; yes, starting planning at 51 is certainly late.
However, a middle-class man with numerous responsibilities usually gets late when it comes to retirement planning. The reason may vary from EMI on apartment loan, student loan, auto loan, etc. Knowingly or unknowingly, the common man of our country fails to dip into retirement savings and realises about this when retirement is fast approaching.
Retirement planning for late starters Tips:
- Repay all your loans: If you know that you are going to get retired in next 5 years, the first in your list should be clearing all your loans. The whole idea behind this is that you have to divert all your savings in developing retirement corpus. In case, you are still paying loans then it is bound to reduce your saving abilities substantially. Understand that having loans even after retirement is a big “NO.”
- Organise your plan: A number of people during their early days buy different policies, have multiple accounts, etc. which they either bought out of choice or at times forcefully. It is better to organise all these. Close those accounts which are not fetching you anything including all the policies. For instance, people pay the premium for different policies which are hardly beneficial. It is better to close these accounts, collect all the money from them and use it to build the retirement corpus.
- Know your requirement: The most important thing that you need to know is your requirement after retirement. Once you are aware of what task is, then only you will be able to plan well. If you have acted smart and have managed to build a decent asset structure, you will not face major issues. On the contrary, if you have less or no money, then it is certainly going to be an uphill task.
Retirement is the time when one is earning the maximum in his career. In fact, the few years of retirement places you at the zenith of your lifetime, and this is the time when you take maximum home. The canny move at this stage is to channelize this money smartly in order to build the corpus effectively. Hence, with zero liabilities and a flabbier paycheck, one can easily build his corpus. This is the key to retirement planning for people who have started late.
- Where to invest: This decision varies from person to person. The logical choice for people who still have 10 years in hand is equities. Understand the fact that your choice of schemes and products you invest in plays a significant role in building your portfolio. If you wish to build a large corpus, you invest as much as 50% of your money into equities, but higher the exposure to equity the greater is the risk. Since retirement is fast approaching, you certainly cannot afford to risk much. Understand the fact that securing your capital at this age is more important that thinking of higher returns.
Your sunset days is the time where you wish to relax, slow down, and enjoy your life. However, all this will always remain a dream if you don’t have the money to enjoy all that you dreamt of. Hence, plan for your retirement, and understand that it’s never too late.