Once you have reached the age of 50, but you do not have any savings or have not done any saving plans, it is not still too late. In order to fund a financially stable retirement, you need to invest aggressively and consistently. However, by the time you are 50, you have more experience and market knowledge as compared to your younger counterparts. This can be taken advantage of as you can exploit your knowledge to invest strategically in places that will give you a good return on investment and also secure your retirement.
When you reach the age of 50, your earnings are at its peak. This means that you have some amount of money that you keep away when you receive each pay check and after paying your bills. This money can be saved or invested in places which will give you a good amount of returns in lesser times. You can choose to invest in the share market. This is a tricky investment avenue, but if you are a person who understands the share market, it will be beneficial for you. Also, if you have kids who are independent or are just about to get independent, then it is a plus point as you will not have to bear the educational or other costs.
Another option is to invest in senior citizen fixed deposits after the age of 60. What can be done is open a normal fixed deposit as of now. This will allow you to save some money for your retirement. You can also choose to work post the age of retirement to gain that extra amount of money. If you opt to do this, then it can boost your savings for retirement.
You must know that on the one hand, where there are risky market investment avenues; on the other, there are fixed deposits and other investment avenues which might not give as high returns as the risky market investments but they are a safe investment and will give you definite returns over a period of time. You can invest in tax-free bonds. The Government backs these bonds. The companies having these bonds are National Highways Authority of India (NHAI), Rural Electrification Corporation Ltd (REC), Power Finance Corporation (PFC), Housing and Urban Development Corporation Ltd (HUDCO), and Indian Renewable Energy Development Agency have ratings that are the safest. These bonds mature in 15 to 20 years, so if you are in your 30s, also you can invest in these bonds.
It is essential that you have a retirement plan by the age of 50 in order to enjoy your retirement years. If you have a house that is vacant, it can be given on rent which will generate revenue in the long run. FD investments in different banks will also be helpful as it will give you a large number of returns from more than one source. Hence, you should plan out your retirement if you have not saved till the age of 50.
An infrequently followed practice by most people who have just started earning is the money which they have to keep aside for retirement. If you think that saving for retirement means that you will get rich, then this is a misconception. Saving for retirement does not mean that you will be rich. It means that you will have enough amount of funding for living the same lifestyle that you lived when you were an earning person. Understanding and discipline are required when long term investment is needed for your retirement. However, you need to build your retirement nest egg, no matter what and there is no assurance whether your investment plans will work out or not.
Your money will only grow when you compound it. It is like your best friend. Simply speaking, when your money gets compounded, it acts like a snowball which is going down the hill. A snowball starts small, but when it travels, it becomes bigger and bigger. Hence, just like a snowball collects more and more snow as it rolls, the amount of money that you invest will be compounded and will increase with time.
Saving While Working:
As mentioned earlier, when youngsters start working, they usually spend most of their income on the things they do not need or is not important to be purchased at that time. If they save at least 10% of their income from the start of their career, then they would not have to worry about saving in the later years of their career. Starting to save early is important because when one is young and has just begun to earn, he is still being supported by his family. This reduces the responsibility on him, and he also does not have any liabilities at that point of time. When one grows older, he has to worry about marriage expenses, buying a car, child education expenses and so forth. Hence, it is important that one starts saving at an early age so that one is able to manage his savings as well as his expenses when he has all the liabilities and responsibilities in his life. Hence, it is important to start saving early.
More Income More Investment:
As income grows, amount of money invested should increase. The calculation is simple and easy. However, when you consider inflation and other market conditions, this may just not be the right decision. There is a contradiction here, but it will be cleared. Let us consider an example; a person saves 10% of his income when the earning is INR 50,000. That means he saves INR 5,000 every month. However, if the savings increase as income increases, there are more chances that retirement funds would increase with a substantial amount. Hence, you must remember that whenever you acquire a raise, you should keep at least half of that extra amount and add it to your retirement savings along with the regular amount of savings that you do for retirement.
Do not use Retirement Corpus:
When you are changing your workplace, you have the option to use your employee provident fund (EPF) for other purposes while you get a new job. It is advisable that you do not touch your EPF but transfer it by filling the simple form in the name of your new employer. This will not only help you break your retirement corpus and manage within your savings. Form no. 13 can be filled if you want to transfer your existing EPF to your new employers.
Hence, it is important that you save wisely for your retirement and have enough amount of funds after you retire.