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Envisioning retirement should be more about travelling far away and indulging in specific hobbies and less about paying off debts or covering bills. While the former looks like a desirable post-retirement lifestyle, almost a majority of the global population is at risk of getting minimal benefits upon hanging the boots.
The millennial population, however, has the tendency to procrastinate retirement savings and this can have catastrophic consequences in the future. While it’s quite frustrating to be old, things get bad when individuals even run out of money. However, retiring rich isn’t as difficult and tricky as it sounds, and one can save a substantial amount of money despite having an erroneous lifestyle and mismanaged saving habits.
In the subsequent sections, we shall enlist some important and functional ideas facilitating post-retirement affluence.
- Start Saving
Nothing beats a decent money-saving mentality. If an individual is planning to retire rich, he or she must learn the basics of saving, as early as possible. Moreover, starting early allows an individual to save a sizeable sum, even if the initial amounts are on the lower side. Apart from that, saving money under a financial organisation allows it to grow and develop into something considerable by the retirement age.
- Know the Saving Threshold
Lack of knowledge is an impeding factor that stuns post-retirement wealth creation. While we did mention ‘Savings’ as one of the primary options to simplify life after retirement, one must realise that there has to be a minimum saving value for sustaining the current lifestyle. The rule of thumb suggests that the saving amount must take inflating transportation, insurance, and health-care costs into account as these factors are expected to persist for a longer period of time.
It can be presumed that nearing retirement, a majority of loans get cancelled out, and the individual only needs to concentrate on maintaining a certain standard of living. Ideally, an individual must look to save somewhere between 8 to 10 percent of their annual income, which can change in future, depending on inflation and dwindling standards of living.
- Plan a Life-Long Income
Retirement planning shouldn’t stop immediately after corpus accumulation. If a person is planning to retire rich, he or she must have enough funds or accumulation strategies for sustaining the current lifestyle. Therefore, every retirement plan must offer a life-long income which facilitates no barrier purchase option and a host of other benefits. Investment in life insurance plans can help in this regard. Especially, retirement plans that offer annuity at the term maturity and guarantee continued payment options to the concerned individuals. The payment size, however, depends on the payment period and initially invested corpus.
- Beat Volatility and Inflation
Both inflation and volatility can negatively impact the existing retirement corpus by silently killing off the long-term gains. Even a 6 percent inflation rate is considered to have debilitating effects. One must also keep a close eye on the health-care inflation rate as the former is expected to be the biggest post-retirement expense, and it’s currently escalating rapidly at almost two times the existing inflation rate.
- Save the Raise
Occasional pay raises can be extremely encouraging, but they can easily wiggle up the existing budget. Whatever be the temptation, it is advisable to save and invest the salary raise as a part of the retirement account. There are individuals who keep expanding their lifestyles with a growing salary. However, instead of upgrading to a bigger home or purchasing a better car, they must beef up the retirement corpus.
Planning for retirement isn’t something that one can associate with youngsters. However, purchasing life insurance plans, especially a retirement plan, is the best way forward as it can help them save money right from an early age.