A Late Start to Retirement Planning – Strategies to catch up

“A year from now you may wish you had started today.” – Karen Lamb

Are you 40 plus.. and haven’t started your retirement savings yet.. don’t panic. You can still make solid progress toward your financial goals if you make the effort now From a Retirement Planning perspective this decade (40 to 50 years) is of utmost importance.

Your Career is probably blooming and the ’50s are always the best earning years in one’s career.

Getting Started Right now:

Forget the past and start by estimating the amount you would require for a comfortable retirement. Take a pen & paper and note down the assets or savings you have which you can allocate to retirement savings. Get a rough estimate of your monthly expenses you would require after your retirement.

Also, estimate how much you can save every month which can be allocated to the long-term savings.

Finding the money to save Eliminate all unnecessary expenses.

Spending is sometimes just a habit that you need to modify or divert yourself in habits that are more satisfying and enriching. Take a look at expenses you would like to give up today to make an investment for your future. You will find many of them especially the subscriptions which you end up paying which are of no real use, for e.g a magazine subscription you never find time to read or a Gym membership where you rarely go. Negotiate for better rates with telecom companies for the telephone as well as internet usage.

Automate your savings.

As soon as your pay-cheque reaches your bank account, arrange for an automated SIP/switch to an Investment account. You will not miss – what you never had. The feeling of your retirement corpus being funded will offset the feeling of spending less.

Invest all extra funds to a retirement account

Expenses tend to rise with rising income, but try to avoid it. Whatever increments you get, bonuses, incentives you get divert at least half of those funds to your retirement account.

If you get unexpected money such as by inheritance, stock options, etc invest the same to the retirement corpus rather than buying a new car or going for a vacation.

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“A year from now you may wish you had started today.” – Karen Lamb

Are you 40 plus.. and haven’t started your retirement savings yet.. don’t panic. You can still make solid progress toward your financial goals if you make the effort now From a Retirement Planning perspective this decade (40 to 50 years) is of utmost importance.

Your Career is probably blooming and the ’50s are always the best earning years in one’s career.

Getting Started Right now:

Forget the past and start by estimating the amount you would require for a comfortable retirement. Take a pen & paper and note down the assets or savings you have which you can allocate to retirement savings. Get a rough estimate of your monthly expenses you would require after your retirement.

Also, estimate how much you can save every month which can be allocated to the long-term savings.

Finding the money to save Eliminate all unnecessary expenses.

Spending is sometimes just a habit that you need to modify or divert yourself in habits that are more satisfying and enriching. Take a look at expenses you would like to give up today to make an investment for your future. You will find many of them especially the subscriptions which you end up paying which are of no real use, for e.g a magazine subscription you never find time to read or a Gym membership where you rarely go. Negotiate for better rates with telecom companies for the telephone as well as internet usage.

Automate your savings.

As soon as your pay-cheque reaches your bank account, arrange for an automated SIP/switch to an Investment account. You will not miss – what you never had. The feeling of your retirement corpus being funded will offset the feeling of spending less.

Invest all extra funds to a retirement account

Expenses tend to rise with rising income, but try to avoid it. Whatever increments you get, bonuses, incentives you get divert at least half of those funds to your retirement account.

If you get unexpected money such as by inheritance, stock options, etc invest the same to the retirement corpus rather than buying a new car or going for a vacation.

This strategy would be the key to your retirement planning success.

Spend on yourself

The Decade of ages 40-50 are crucial in one’s career. Invest in upgrading and educating yourself to tap the opportunities to the fullest. Keep learning in 40’s, attending classes and training programs which would give up benefits in your 50’s while you reach the peak of your career.

Also spend on good health and food. Being a healthy person you will automatically save the high medical costs of the future.

Invest more Aggressively

Don’t be conservative with your retirement savings because at 40 you still are two decades away from your retirement. Invest in well-researched equity shares and Mutual funds. It may expose your portfolio to some volatility but if you invest all your savings to fixed income you may not be able to keep up with inflation.

Review your Portfolio and Re-balance

Asset allocation is the key to the success of any investment. Review your portfolio at-least once in a year and make necessary adjustments keeping in mind the best you can do with the time you have.

About Author

Mansi Bhambhani

A Chartered Accountant passionate about Finance and Investment, Making wealth work for you and your family.

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