Retirement Planning After 50:If you have not planned for retirement by the age of 50, it may be a matter of concern, but if the right strategy is adopted, this delay can be compensated to some extent. For a better future, you will have to analyze your current financial situation and make a strong plan for investment and savings. Let us know how you can turn this challenge into an opportunity.
Focus on clearing the loan first
If you have a big loan, like a home loan or personal loan, then the first thing you should focus on is settling it. The burden of loan not only limits your income, but the additional interest cost can also make it more difficult for you to achieve your financial goals. To settle the loan sooner, you can consider paying extra EMI or use any extra income including bonus. Once the loan is over, your monthly cash flow will increase and you will have more money left to invest, which you can use for your retirement planning.
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Avoid Guaranteed Return Policy
Many people consider guaranteed return policies to be a safe option, but these plans offered by insurance companies usually give only 3-4% returns. This return becomes even lower, even negative, after adjusting for inflation. Additionally, these schemes also lock your money for a very long period, due to which you are not able to avail the benefits of other options which can give better returns. So instead of guaranteed return policies, you should invest in high-return options like mutual funds, which are better for achieving long-term financial goals.
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Invest long term in mutual funds
Mutual funds, especially index funds and flexi-cap funds, are a strong option for building a corpus for retirement. By investing in these funds you can get returns of up to 10-12% annually. For example, if you invest Rs 2 lakh every year, it can turn into a big fund in 10 years. Apart from this, these funds also provide the benefit of diversification, due to which risk management is also done in a better way.
Emphasize diversification
Diversification, i.e. investing your money by dividing it into different assets and schemes, provides stability and security to your portfolio. Invest by dividing your investment into different assets like equity, debt and gold. This will not only give you a chance to get high returns, but will also help in reducing the risk. With diversification, your portfolio will be able to withstand market turmoil better.
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Adopt Systematic Withdrawal Plan (SWP)
After retirement, there is a need for regular income. For this, Systematic Withdrawal Plan (SWP) is a great option. SWP lets you withdraw a fixed amount from your investment at regular intervals. This scheme helps you in getting stable income and also your principal amount also keeps increasing with time. SWP is also tax-efficient as only the gains are taxable. This method can give you long term financial stability.
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Maintain regular investment and discipline
The success of any investment strategy depends on discipline and regular investing. Investing a fixed amount every month will take you closer to your financial goals. The effect of compounding can make your investment grow exponentially over time. Therefore, no matter which scheme you select, continue investing regularly with a long term view.
If you follow these measures, you will be able to prepare well for retirement even after the age of 50. Due to starting late, you will have to show a little more discipline, but as you age, it is very important to do so in order to live a peaceful life and move towards a better future.
