Vaibhav is one among the young executives starting their careers in a leading digital marketing agency. He completed his first quarter of life only six months ago, and he sounds legitimately surprised at the question of retirement. So, do the other young digital media professionals.

The next few words that came out of his mouth, also reverberated well with his colleagues, “But I just started working!”

How Important Is Retirement Goal?

Speaking financially, it may sound a far-fetched dream of a goal. But, for areality check, the following factors make retirement goal and important one:

·         We are naturally inclined to stop the stressful work after a certain age

·         You’d want to get out of the rat race someday

·         Even if you don’t feel like retiring you’d like to achieve financial independence

·         You may end up with limited sources of income post retirement

·         High inflation and increasing health risks make it necessary for you accumulate sufficient wealth by a certain age since insurance policies will stop covering your health.

There can be many more reasons we can list here. However, the crux of the retirement planning is not about stopping to work. It is about having sufficient wealth to meet your needs, goals and aspirations.

Just think of the things you’d like to do if you need not worry about earning money to meet your needs. This stage is retirement.

Post-retirement, it should be your choice instead of a compulsion to work or simply enjoy the fruits of life.

So, what can you do about it? Here are few steps you need to take…

Start Now

In investments, the only thing that ensures the growth of money is, ‘time.’ The longer your money stays invested, the more it grows. And since we all have limited time, starting as early as possible is the only option to ensure maximum growth time for our investment.

Also, since retirement requires a large pool of wealth, to accomplish this goal, you need as much time as possible. So, if you fall into the age bracket of 25 to 30, don’t just aim for a satisfactory retirement at 60. Aim for retiring rich or retiring early (you may already be on to this).If retiring rich or early sound attractive enough to you, better plan and start your retirement savings now.

Plan for Contingencies

Life is not a simple and straight journey. There are multiple risks you face. Many of these risks need sound financial backing. These risks will include, hospitalisation, accident, critical illnesses with expensive treatments, etc.

Also, when you are aiming for a high and distant goal, such risks pose a huge threat to the goal. Therefore, you need to ensure that you have the financial backup plan to look after your expenses.

Fortunately, insurance plans are covering most of these risks. For example, health insurance, critical insurance, accidental covers, etc.

Apart from health insurance (Mediclaim), other policies you can buy as riders along with a term life insurance plan. Again, many of you may think why you would need a term insurance plan, especially if you are not married yet and have no responsibilities.

Following reasons compel us to suggest a term life insurance plan to young people like you:

·         Your parents have spent a fortune on your career education and may still be supporting you financially

·         You are running an education loan or may end up taking other loans, which must be looked after by your parents/closest relatives if anything happens to you

·         Buying term cover at early age gives you a cost advantage (lower age = lower premium)

Be Consistent

Once you have planned the retirement goal and start investing, discipline and consistency become the next most important factors. If you feel that you need a push to keep investing a fixed sum at regular intervals, you need to select Investment options with the following two characteristics:

Ø  It is for long-term

Ø  Investment is compulsory for the selected period

Examples of such investments are investment plans offered by life insurance companies like pension plans, Unit Linked Insurance Plans (ULIPs), etc.

Give a Tinge of Equity

Since you have time on your side (provided you start investing as soon as possible), you have an opportunity to take more risk. You can invest in instruments which derive returns from equity markets, for example, Equity Linked Savings Schemes (ELSS), ULIPs, National Pension Scheme (NPS), etc.

Some insurers also offer pension schemes with equity investment option which can be a good choice for a disciplined approach.

Don’t Forget to Revisit

The situation will not be the same as it is now, you will age, your risk-taking capacity will diminish, and responsibilities increase. Therefore, it is important that you revisit your investments time to time (say every 5 to 10 years) and adjust to the new situation.

Investments like ULIPs, Pension Plans and NPS offer to switch your wealth from equity to safer debt automatically. However, with ELSS you can you the transfer options (Systematic Transfer Plan) to switch your money to debt funds.

Retirement may be a huge financial goal, but with the right approach and sufficient time, it is possible to not only achieve the goal but also to retire rich.