Contrary to what the act of retirement actually entails, you’re not closing doors; rather, you’re opening the door to one of the most fulfilling and enjoyable stages of your life. It’s when you truly get to spend time with your loved ones and get time for yourself. Imagine a never-ending vacation that you’ve earned for years and years of hard work.

However, like any other holiday, this vacation too comes at a price. The financial responsibility is something you need to think of before you retire and not after. This is where retirement planning comes into play.

Investopedia defines retirement planning as ‘the process of determining retirement income goals and the actions and decisions necessary to achieve those goals.’ In essence, it’s planning you do to live the life that you want to live after retirement. Apart from financial planning, this includes things like what kind of lifestyle you want to live, and how you’d like to spend your time in retirement. For those of you wondering how you can start planning for your retirement, here are 5 tips to help you out.

• Start Now:

The earlier you start, the better off you’ll be when you retire. As mentioned earlier, a retirement plan has to be built and executed before you retire. Starting when you’re young, gives you ample time to regularly revise your strategy and find the best combination of investments to make in order to meet your financial goals and other related goals. To add to that, there is the power of compounding that works in your favor.

• Stick To Your Goals

For the average individual, retirement planning spans over the following three life stages-

1. Young Adult (22-35)
2. Early Middle-Age (36-55)
3. Late Middle-Age (55-Retirement)

You need to make sure that at each of these three stages, you have your focus on your goals at all times. Avoid mistakes like not planning early and not taking precautions as a young adult, unorganized savings, making unplanned investments during your early middle age, and utilizing retirement savings to clear debts during your late middle-age years.

Don’t get swayed by promises of high-returns on high-risk investments; keep an eye on your risk-taking ability along with risk required in your portfolio. The whole point of this exercise is to be financially stable even after you stop earning active income. Keep that goal in mind at each stage of life and you’ll reap the benefits of your patience right when you’ll need it.

• Taking Advantage Of Your Salary

Perhaps the biggest advantage you have as a working professional is your salary. Even if you take a little bit of that money every month to invest, you can earn a significant ROI over the course of the next 20-25 years.

Some investments that are already a part of your payslip, like Employee Provident Fund (EPF), and National Pension Scheme (NPS), are already helping you move towards a financially-secure retirement.

In fact, they also offer great short-term benefits as they are excellent tax saving tools as well. And the best part is, as your career progresses, so does your paycheck. This means that you can keep increasing your savings with each salary hike; all it takes is the discipline to ensure that you’re thinking of the future when you earn for today.

• Stay Clear Of Debt

Being in debt is no fun. Whether you’re employed or retired, accumulating debt is the last thing you should do if you want to build a healthy financial portfolio. However, it’s a given that you will inevitably end up taking some form of debt in the future, like home loans and or car loans. So, if you have any debts, or take up a loan in the future, do not make them a part of your retirement plan. Devise a plan which allows you to comfortably pay off your debts before you retire, while also helping you save up for your golden years.

• Don’t Forget Estate Planning

Any certified financial advisor will tell you how important it is to declare what happens to your assets in case you were no longer around. Apart from your will, which lays out the plans for your assets, look into means of reducing the tax burden that comes hand in hand with owning properties. Everything including vehicles, insurance, and personal belongings are a part of your estate, so make sure to include them all when you start estate planning.

And lastly, whenever you work on your succession plan, make sure your debts don’t devolve upon your loved ones. Work with your financial advisor to ensure that they only receive your assets, and aren’t burdened with the liability of your debts.

Hopefully, these 5 tips should be enough to help you kick-start your retirement planning journey. If you have any questions regarding financial planning for retirement, please feel free to get in touch with us below.