What is Retirement Planning?
In a very simple way we can explain that the plans and executions to secure the post retirement life or to maintain the same standard of living after retirement are the part of retirement planning.Retirement planning is neither a T-20 match nor a 50 overs one day cricket match.It’s like a 5 day cricket test match.Where one’s patience,hard works,disciplined techniques are measured.And the ones who follow all these technical glitches are called a successful cricketer and in finance parlance a planned investor.An aggressive planning for investment or investment made in hurried way without thinking for other financial aspects can land a person no where.Therefore, a patient and disciplined approach of investment is the main key for retirement planning.
One must know that retirement planning is not a goal,rather this is a systematic approach which would sail through the working years and end up at the retirement period.
We, the Indians are educated enough but not to that extent to differentiate between “savings” and “investments”. Often, we confuse ourselves between these two aspects.Letting your money keeping idle in bank accounts can be termed as savings.On the other hand, letting your money grow and earning an income over inflation can be termed as investments.Obviously, this is completely our own point of views and others may differ.
We have seen many of our friends telling us that they have made some investments very prudentially by investing in few LIC policies of their own choice.In India 50% of the educated people may be more than that keep saying buying some LIC policies as investment.They don’t consider this as insurance coverage and rather they are very much delighted with this investment.This is completely wrong.Many of the traditional life insurance policies fail to deliver an inflation beating return and still we keep on saying this is our primary investment.
Buying traditional life insurance policies ought to be perceived as taking insurance coverage against the life of the insured person in the event of unforeseen contingencies.On the contrary, keeping your money in various fixed or variable return providing instruments are called investments viz; putting money in Fixed Deposits,buying NSCs,Mutual funds and etc.
Therefore, buying some costly traditional life insurance policies should not be construed as investment for sun set years.Rather, we must set up some needs or estimations keeping in mind the current income status,lifestyle,financial burden,qualifications,inflationary condition,period of retirement, obviously realistically.Then we must focus on the avenues where one should park his investments that can deliver an inflation beating return to reach the preconceived retirement kitty.Also, there are many other aspects to be kept in mind when planning for one’s retirement.This discussion has been kept very simple for everyone’s easy understanding.We should also ask ourselves whether still we are confused between savings and investments.