When it comes to preparing for retirement, there is no dearth of information. On one extreme are the overly optimistic counsellors who are sure you can retire at 40, and on the other are the ones who lament that you didn't start preparing with your first paycheck. Between them, lies a sea of opinion. It can get overwhelming (and confusing!) pretty quickly.
However, if you navigate by asking the right questions, and sourcing the right numbers, achieving retirement nirvana doesn't need to become the herculean task it's made out to be.
Question #1: How long do you need to work for, if you want to maintain your lifestyle after retirement?
This is where the right numbers come in. Doing the math involves looking into:
- Cost of living projections for the age you want to retire at, and the average life expectancy for your generation (+10 years, to be safe)
- Current and projected rates of return on investments
- Inflation projections
All of these numbers are easily available online. The next thing you need to work out is the cost of living for each year you spend in retirement. You then need to work backwards, use the rate of return on your investments to calculate how much of your expenses can come from returns, and how much from your principal. In doing so, you arrive at the corpus you need the day you retire. You then need to check this against inflation.
If this is too much math for you, then just head over to Standard Chartered Bank's retirement calculator and let them do the math for you. The calculator indicates how much you need to invest each month, in order to create the retirement corpus you'll realistically need to be financially independent all the way into the final sunset.
Now, if that amount looks unrealistic, try bumping up your retirement age by just one year. Continue doing so, till you reach a number that looks achievable. Now, use this projection to plan. You may find that you can't retire at 40, and that can feel disappointing. However, you now have a realistic picture of what your investments should look like.
Question #2: What is passive income, and how can you create passive income that doesn't eat into your retirement corpus?
Passive income is earned from investments, rental properties, etc. This is money that you don't actively need to work to earn and maintain. Progressive passive income is income that grows without additional effort on your part.
As you can imagine, passive income (and progressive passive income) is great for your retirement. Not only does it mean a reduction in your corpus (because you're generating income even when you retire!) but it also helps you put away more money into investments today, by augmenting your income.
One of the most popular ways to generate passive income is through market investments. It's never been easier to begin investing, especially if you're a Standard Chartered Priority Banking customer. With access to SC Invest, you enjoy instant investment account setups, recommended SIP packs that are best suited to your risk profile, access to market insights within the SC Invest app itself, and of course, relationship managers that can help you navigate whenever and wherever you're stuck.
Question #3: How can you shockproof your retirement?
No one has seen tomorrow. Sometimes you can work out all the numbers, take all the right steps, plan everything… and be blindsided by a personal crisis. Go beyond just term and health insurance with an expanded bouquet of offerings for Priority Banking customersfrom Standard Chartered Bank and its partners. Insure your business against a wide range of perils, travel with confidence with travel and personal accident insurance, complement your investments with insurance plans that give you the opportunity to save and grow your wealth, in addition to coverage for yourself and your family.
Invest in your health and wellness with complimentary and discounted wellness packages. From specially priced, personalized diet plans for weight loss by expert nutritionists to discounted home nursing assistance and physiotherapy, complimentary tele consultations with doctors to access to holistic oncology care packages, discounted home quarantine programs to specially designed wellness packages for heart health, weight management and active aging, all from the comforts of your home.
These comforts may not mean much now, with youth on your side. But think about how much of your corpus would otherwise need to be channeled into these services, as you get older. Retirement comes built in with increasing health challenges, and the better prepared and provided for you are, the less it blindsides you - both physically and financially.
Question #4: How can you stay ahead of inflation?
For your retirement corpus to mean anything, it has to grow faster than inflation. As any savvy investor will tell you, your investments must take into account your risk appetite, your age, your passive income and growth goals and your post-retirement plans. There will be times in your life when you'll be more risk averse, or the stability of your income will allow for longer term investments, or your passive income will allow you to focus more squarely on growth.
This is when you need the right insights, access to good information, and the ability to act quickly. With SC Invest, you're always in control of your investments. Additionally, as a Standard Chartered Priority Banking customer you have access to regular and timely market reports that help you stay ahead of the curve. You're also invited to investment related events and webinars, allowing you to be the first to grab opportunities when they come knocking. You can also access insights on-the-go through their wealth podcast that brings in-depth analysis from industry experts.
With a full suite of property financing solutions, Standard Chartered Priority Banking helps you make the most of your real estate opportunities - home loans, loans against property, home insurance solutions from reputed insurance providers, and expert property loan specialists who can help you navigate these solutions with ease and confidence. Passive income from property investments can bolster your retirement strategy, and significantly reduce your corpus amount by generating income that keeps pace with inflation.
Conclusion
Begin by asking the right questions, and the solutions will follow. Work towards your retirement consistently, with the right tools and partners by your side to make the journey easier, less bumpy and more fruitful. Remember, no matter how big the elephant is, you'll succeed if you eat it one bite at a time!
Disclaimers:
Standard Chartered Bank, India (Bank) is an AMFI registered distributor of select mutual funds and referrer of other third-party investment products and does not provide any investment advisory services as defined under the SEBI (Investment Advisers) Regulations 2013 or otherwise. Investments are subject to market risk, read scheme related documents carefully before investing. Past performance is not indicative of future returns. The Bank is also a licensed Corporate Agent of ICICI Prudential Life Insurance Company Limited, Royal Sundaram General Insurance Co. Ltd., Niva Bupa Health Insurance Company Limited and ICICI Lombard General Insurance Company Limited. All insurance products are underwritten by the respective insurance companies.
Apart from the RM-assisted journey SC Invest is an EXECUTION-ONLY platform. The Bank does not offer any investment advice nor does it provide any investment recommendations in respect of any transaction executed through the SC Invest platform.
The retirement calculator is provided for information and educational purposes and is meant for use only as a reference tool. The simulation from the calculator does not represent actual, past or predicted performance or returns. Applicable taxes and charges if any have not been considered in its workings. The calculator has not been prepared for any particular person or class of persons and it has been prepared without regard to the specific investment objectives, financial situation or particular needs of any person. It does not constitute and should not be construed as investment advice nor an investment recommendation. Please obtain independent financial advice before proceeding to transact on the basis of the information obtained from the calculator.
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