All Questions Answered on Retirement Planning – Part 2

This is the second part, where all your questions on Retirement Planning are being answered, we plan to dig deep in terms of planning the retirement. There are questions like what’s the correct age to retire, what time plan should be implemented, who can assist me in planning etc… here we start one by one:

When is the right time to retire?

There is no right time for retirement. Deciding whether or not to retire is a decision that only you can take. If your financial situation, health, age and feelings about your job all point towards retirement, it’s time to call it a day. Ideally, you should work as long as you can. Based on individual requirements, financial stability and liabilities, you should plan your retirement accordingly. Normally in India, we consider age factor as retirement. Well it was then when it was assumed that person would fulfill his responsibilities towards his kids (education and marriage), and then can settle. But things have changed now as careers, marriages, kids all have shifted little late in age. So a person can think differently if he is financially secured. Hence, planning has become more essential.

Why do I start early with my Retirement Planning?

It’s never too early to start. Wealth creation is a time-taking process and usually lasts throughout your lifetime. So the earlier you start the more time your money gets to multiply. By starting early with your retirement planning, you can benefit from the power of compounding, manage the longevity risk and maximise your returns from high-risk and aggressive investments options. It’s always wise to start saving early.

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If I start late, can I still plan my retirement?

The early bird catches the worm. Starting late with retirement planning poses many difficulties for creating a strong corpus and sufficient wealth to see you through retirement. However, the good news is that it’s never too late to start. If you are late, all is not lost and you can cover for lost ground. You can take the following measures to make up for starting late:

Cut down expenses.
Seek expert advice / professional help to create a roadmap for you to maximise your savings without compromising your standard of living.
Choose investment options that give you higher returns.
It is good to have a working spouse to generate an additional income stream.
Look for additional income through another job / business simultaneously if possible.
Start immediately.

What should I look for in a retirement / financial planning advisor?

Determine the quality and tenure of his / her work experience.
What are his / her qualifications?21
What services does he/she offer?
What is his / her approach to building a financial strategy for your financial goals & retirement?
Will he/she be the only person working with you? Or engagement would mean other professionals to collaborate.
What are the costs of working with him/her?

An important consideration is whether you are comfortable with a prospective retirement planning professional. Consider the following:

Does the person have time for you regardless of how much money you have to invest?
Does he or she listen to you and respect your opinions?
Does the person use financial jargon or explain investments to you in simple terms?
Is he/she offering a personalized solution?
Is he offering you advise or trying to sell products and solutions that are available to him?
Does he have a long-term approach?

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How do I select a retirement advisor?

Search the Internet for top retirement and financial advisors.
Talk with friends, family, neighbours, or business associates to get recommendations.
Look around your community for financial specialists with offices nearby.
Talk to your accountant or any other professional about retirement advisors they know and respect.
Specifically look for a Financial Planner and not an agent to look after your investments.

What can I expect in my meeting with a retirement advisor?

Your retirement advisor will need some time to ask you questions and understand your goals. Some questions he or she may ask include:

What stage of life are you in and what are your current earnings and savings?
What are your specific financial goals such as saving for a child’s education, marriage or planning for retirement?
How much risk are you willing to take with your investments?
Expect that he will ask you lot of questions on your income and expenses.
He will not be free so expect that he will tell you his remuneration.

In the next and the last post, we answer following queries: