3 Major Challenges In Retirement Planning, How To Save And Retire Rich

Most of us begin retirement planning only when we are near to our retirement age. Planning for retirement from the start of your career may sound odd to many but having a decent living in your post retirement life is also essential.

Retirement is a phase when we stop receiving regular funds. Planning for your retirement late would end up living a life with dearth of funds, meeting basic emergency needs would be a task then and with minimum funds at hands growing wealth or investment would also not be possible. So to at least have a life same as that of now would require a proper, systematic and early retirement planning.

What are the Phases of Retirement Planning?

Retirement planning is divided into 3 phases the nascent phase, the mid-career phase, and the post-retirement phase. Starting retirement planning in the nascent phase would reduce the pressure of investing more to build a decent retirement corpus and also reduce the stress of saving post retirement.  Moreover, with early retirement planning, the time for the wealth to multiply is longer thereby assuring better returns.

How Much Is Enough To Retire Rich?

Calculating the amount that would be needed post retirement is paramount. Deciding on the amount would require a deep thought process keeping into account your present expenses, your dependants post retirement (mainly spouse) and your financial goals if any.

The above calculation includes the expected number of years you and your spouse would be living post retirement and the medical emergencies that would arise during this period. These factors would help you to keep a buffer in your budget while planning for the financial needs post retirement.

What are The Primary Challenges for Retirement Planning?

The first challenge is understanding whether the corpus invested would grow adequately or not.

Choosing the right investment avenue amidst the several options is not easy. Depending upon one’s risk appetite, one can choose between the high-risk high return investment or low risk low return investment.

The second challenge is whether the income needs post retirement is adequate or not?

It is not easy to estimate the right amount you would need post retirement. Although you have shifted to your own home and have another one to rent out, you are still unsure how much you may have to pay as maintenance charges for staying in these houses. Also, you may have added interests to travel to places during your retirement days.

The third challenge is to keep a balance between the withdrawal corpus and the invested amount.

Knowing the amount, you would need to withdraw and the amount that needs to stay invested is one of the major challenges. Whether you would keep your principal amount and use all your interests or keep the money invested for a long term is the question. Using us all the wealth you earned and leaving behind the principal amount would not be an ideal largesse for your children. Similarly, if you plan to keep your corpus invested for long say for 30 years then choosing a plan that can give you good returns on your invested amount needs to be thought over.

Hence to retire rich, one would need to start retirement planning early, choose the investment products that can generate adequate wealth for post-retirement life.