Heres How You Can Retire Comfortably!

Heres How You Can Retire Comfortably!


Meyyappan Annamalai
Co Founder and Partner, Tranquil Capital

Our elders teach us that life consists of various phases – beginning with education, building a career, growing into a well-paid professional, and finally, the stress-free life of retirement. While previously the retirement phase came with perks like pension and provident fund which enabled senior citizens to get through the last stages of life in a stress-free manner, with the change in provisions and increasing inflation, pension is no longer a viable source of financial support for most individuals, especially those employed in private sector jobs.Additionally, with life spans rising steadily, and medical bills going up, provident fund goes only so far. Add to it the fact that many of us wish to travel and maintain a premium lifestyle in the latter years of our lives. It is here that financial planning for retire-ment takes on prime importance.

Building a Sustainable Corpus
The most important question one needs to answer is by when should you start planning for your retirement? Usually most of us think of retirement only 5 – 6 years before it is time to retire. The problem which will come up at that point of time is that the time left to generate the desired retirement corpus will not be sufficient. Hence, it is important for everyone to start setting aside some part of their earnings towards building a sizeable retirement corpus as early as possible in their career. As you begin your retirement planning journey, one of the most attractive options available to you are mutual funds.

Offering you the freedom to invest across multiple asset classes, based on your risk appetite and financial goals and astute fund management with experienced professionals, mutual funds enable you to meet the dual requirements of safety and growth. Nowadays, most fund houses offer you retirement plans featuring immense flexibility and a variety of risk profiles, making it easier to choose a plan most suitable for your individual requirements. Based on your investment capability, age group, risk appetite and retirement goals, you can choose mutual fund schemes ranging from the aggressive (high risk, high returns) to the conservative (low risk, assured returns). Additionally, mutual funds help you inculcate a habit of saving regularly, especially if you opt to invest in a pocket-friendly way with a systematic investment plan (SIP). These investment vehicles offer you an opportunity to invest a fixed amount of money in a mutual fund scheme of your choice at a frequency that suits you best.

This way you can start investing money for your retirement in a disciplined manner and reap the benefits of compounding which could potentially grow your retirement corpus. Investing in a mutual fund scheme by way of regular SIPs can help you maintain your lifestyle, retire with a safety harness, and enjoy your retirement phase in peace and financial s e c u r it y.

The SWP Option
When it comes to a retirement corpus, a systematic withdrawal plan (SWP) offers you a regular income flow that can help you meet your routine cash requirements, much like your monthly salary. Adhering to a SWP enables you to hold an amount in a fund of your choice and withdraw a fixed sum, periodically. For instance, if you have a corpus of `10 lakhs in a particular mutual fund, you can opt for a SWP that allows you to withdraw `10,000 per month, helping you with your monthly expenses. Making the option more lucrative is the fact that you end up paying lower tax on the amount you withdraw, and when the fund finally matures your tax outflow is further limited as you have already withdrawn a majority of the corpus in a systematic way.

One should be mindful to check if the SWP option provided is fixed or flexible. The mutual fund industry is known to offer both these options. A leading mutual fund house has intro-duced a product called ‘Freedom SWP’ which takes care of such requirements in a seamless manner. By opting for such an option available, the investor has a clear visibility of his or her cash flows during one’s golden years. Now that you know the best retirement plan available, why delay? Start investing today and gear up for a stress-free retirement.

The writer is a Co Founder and Partner, Tranquil Capital
 Email: meyyappan.a@tranquilcapital.in

 

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