Many make the mistake of failing to save for retirement or choosing the wrong investment options, according to Naveen Rego, Certified Financial Planner and trainer.
Delivering a talk on retirement planning here, Mr. Rego said the need for retirement planning was far more significant in today's realities of nuclear families where people hardly have anybody to depend on post-retirement. The factors such as increased life expectancy and low old age security and high inflation made retirement planning a must for everyone. The talk was organised by the Mangalore Chapter of Institute of Cost Accountants of India.
He said people must know in the early part of their career the amount they need to accumulate by the time of retirement with the inflation factored in. Then they should begin to invest in shares of mutual funds, real estate, gold (through exchanged traded funds) and other investment options such as PPF if they do not enjoy PF savings through their employers.
Between the age of 20-45, people should invest aggressively in shares or mutual funds which promise high return in the longer period despite volatility of market, Mr. Rego suggested. Closer to retirement they could select less volatile investment options. People should not ignore the option merely because they do not understand share market. Such people could at least invest in mutual funds.
Stating that fat salary did not promise creation of wealth, he said even people with small incomes could create wealth through control of unnecessarily expenditure (like purchasing unnecessary items in super bazaar falling prey to sales strategies), paying off high cost loans, focussing on goals, investing regularly, keeping patience and working with professional financial advisors.
Those who planned well and saved aggressively could retire early. Retirement did not mean not working. It only means people no longer work primarily to earn money.
Copyright © 2012, The Hindu ____________________________________________________________
Credit: Reports and photographs are property of owners of intellectual rights.
Seniors World Chronicle, a not-for-profit, serves to chronicle and widen their reach.