Home » News » Personal Finance»Retirement
Jul 31, 2013, 06.25 PM | Source: Moneycontrol.com

Find out whether your retirement planning is on track

Financial planner and trainer Vivek Sharma presents a checklist to find out whether you are on the right track in planning for your retirement.

Vivek Sharma

Retirement planning is a herculean task. The magnitude of the post retirement corpus requirement is so huge that it cannot be achieved without smart planning. While creating adequate corpus for retirement planning requires meticulous investment strategy, it is equally important to check whether retirement planning is on right time path or not. 

Also read: Find out: 4 common mistakes in retirement planning

With increasing inflation and ever increasing needs, one needs to ensure that neither the creation of corpus nor the timelines for creation of corpus gets missed. In order to watch whether retirement planning is on track or not, there is a need to develop checklist for retirement planning. Here is a checklist to see if your retirement planning is on right path or not: 

You must be owner of the house by 45 

Age of 45 is a critical benchmark for retirement planning in many contexts. One of these is the ownership of the house where you stay. You need to ensure that by the time you turn 45, the house becomes loan free.

This will help you build a good corpus from 45 onwards till your retirement, even if you invest in debt. While there is nothing sacrosanct about this age, you can use it as a benchmark to put yourself in a comfort zone.

In order to ensure this, house where you wish to stay should be bought during initial years of job or starting of profession. One of the important costs in day to day expense management is the cost of rent, in case you don’t own a house. By owing a house, you will be able to take care of this aspect.

Create your health insurance coverage comfort by 45

Healthcare expenses are very high post retirement. You need to build health insurance coverage by a particular age. Buy an insurance plan which covers you up higher costs on health front. For instance, in today’s scenario it won’t be unfair to look for coverage of atleast 25 lakhs for health coverage.

There are many insurance companies which have started providing high insurance coverage now. You need to scale up your insurance coverage so that by the time you reach 45 years, you have adequate coverage.  Healthcare costs can have a killing effect on your financial planning process if they are not managed well.
Your investment corpus should be ten times of annual expenses by the age of 50

This means that if you annual expenses are 5 lakhs per annum by the time you reach age of 50, you should be having a corpus of Rs.50 by this age.  The creation of this kind of corpus will give a comfort and help you build further corpus without taking much risk from 50 years onwards.

This is critical as the risk appetite reduces substantially after the age of 50. This can be achieved by increasing savings year on year and making investments so that atleast 20 percent growth in retirement corpus is seen year after year.

Keep on watching growth in your retirement planning corpus year on year and also check if you are missing any of your milestones that you have set.  Any slippage would require change in strategy. Ensure that you achieve targets always.

ADS BY GOOGLE

Ask the Experts

Get your Personal Finance queries answered

  • Q

    If I put Rs 2 lakh in PPF, how much tax rebate I will get?

    A

    As per the existing guidelines and rules a person cannot deposit more than 1.5 lacs in one PPF account. However you can deposit money in the...

  • Q

    Interest rates are going to go down. And all my fixed deposits will be maturing next year. I will have to renew my fixed deposits next year at lower rate of interest. What is the way out?

    A

    Interest rates keep fluctuating due to various micro- and macro- economic factors. There is never an ideal rate of interest. In a high inter...

  • Q

    I want to buy online term life insuance plan. Which is the best one? Should I go for single premium or regular premium policy?

    A

    Single premium term insurance policies don?t make much sense. Why pay such a large amount at one go when you have the option of paying in sm...

  • Q

    I want to invest some money with at least ten years view. I dont want share market risk. Can I invest in NSC? Is there any other investment option?

    A

    NSC or National Savings Certificate is a safe investment scheme offered by the Central Government. It is an ideal option for investors with ...

  • Q

    Is it a good idea to invest in asset allocation funds? if yes, please suggest some good fund to invest money. I am 35 years old and can invest Rs 10000 per month.

    A

    Asset Allocation Funds are for those investors who want to take an exposure into different asset classes but do not wish to create their own...

  • Q

    My CA says that I have to pay tax on interest accrued on my FD of Rs 20 lakh. I have submitted form 15H in all banks. Is it necessary to pay tax in this case?

    A

    In case of interest on fixed deposits which is taxable under the head ?Income from other Sources? a taxpayer has two choices. Either you can...

  • Q

    Please suggest a good investment option of land in South India. I want to buy a land parcel of around 2 acres.

    A

    If you take a look at the South Indian real estate market, Bangalore has emerged as a clear winner. Due to the strong presence of IT/ITeS an...

  • Q

    I want to invest Rs 20000 per month. I have identified Reliance Small Cap Fund and DSPBR Micro cap fund for investment. I can hold to investments for two years. Is it a good idea to invest in these schemes? How much returns I will be getting?

    A

    If you are an aggressive investor, you can consider investing in either of the 2 funds.DSPBR Micro Cap My suggestion is that if you are inve...

  • Q

    I want to save my money for retirment Please suggest a good insurance policy

    A

    For retirement it is advisable to use multiple investment instruments and not just life insurance policies. If you have 15 years or so for r...

  • Q

    IS IT a Good time to invest in GOLD ?

    A

    Currently the outlook for gold is bearish/negative. However if you are planning for a long-term investment in gold it is ideal to invest the...

  • Q

    I have retired from my job in November. I have got Rs 48 lakh from my employers, by way of epf, gratuity and other benefits. Should i invest in senior citizen scheme of LIC? How about pension plans from LIC?

    A

    1. You can invest Post office Senior Citizen Scheme. 2. You also should invest lumpsome in MIP in post office and get monthly interest. 3. K...

  • Q

    I want to save Rs 1 crore for my retirement when i turn 60. Now I am 42 years old and have fixed deposits worth Rs 18 lakh.What should I do to reach Rs 1 cr mark?

    A

    start investing a minimum 5000 per month in mutual fund and increase 10% to 20% every year....

  • Q

    I want to save on my utility bills and fuel expenses.Please suggest a good credit card for me.

    A

    Yes, you will be able to save on Utility bills and fuel expenses through the cash back schemes offered by some of the credit card companies....

  • Q

    Suggest couple of equity mutual funds for me. I am keen to invest Rs 25000 per month for next couple of years. I can remain invested for at least five years?

    A

    Asset Allocation Funds are for those investors who want to take an exposure into different asset classes but do not wish to create their own...

  • Q

    I am a senior citizen.I received interest of Rs .1,70,000/- on FD.I have duly filled 15G form.I have NO other source of income.Have I to pay Income tax on this interest or can it be excempted?

    A

    Sir, please note if you are less than 80 years but more than 60 years of age, your total income upto Rs 3,00,000 is exempt from tax, you are...

  • Q

    Please suggest a good money back policy for me. I am 27 years old and want to accumulate Rs 10lakh over 10 years.

    A

    If you are a fan of traditional money back policies, go in for the LIC New Money Back Policy of 20 or 25 years. I would suggest you go in fo...

  • Q

    I want to buy a life insurance for my brother Please suggest a good policy. He is 19 years old. he should get Rs 5 lakh when he turns 25 years.

    A

    Best to go in for a ULIP in case he is looking to grow the money also. Go in for a ULIP like HDFC Click 2 Invest which is very low on charge...

  • Q

    In 2013, I bought an Endowment policy from LIC. Premium for that is around 35K per year. Now i understand, this was a big mistake and i want to go for a term insurance policy. I have already paid two premiums in 2013 and 2014 and I want to make this policy paid-up. Can i pay one more premium this year and make that endowment policy paid-up ? Or is there any better alternative ? Please suggest.

    A

    Yes, you can convert to a paid-up policy after 3 years premiums have been paid. I would recommend that you surrender the plan and take back ...

  • Q

    Is zero depreciation cover a good option under auto insurance? I have plans to buy honda city in January

    A

    Zero depreciation is a good option to along with the standard car insurance plan. By paying a slightly increased premium you can ensure that...

  • Q

    I am 20 years old,I am getting 17+ % or returns from share in my portfolio consistently for the last 6 months.should i think about a career in stockbroking?

    A

    Its nice to note that your portfolio has been gaining such high returns, however it might be too early to take a call and make stockbroking ...

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.