Retirement planning in your early 40s

Retirement planning has been a major concern not only for people in India but also globally. Also, people have a myth that high income people do not need retirement planning. However, many instances have come forth where people with considerable income are unable to accumulate enough for their retirement. There can be various reasons like plenty of expensive debt, upgrading lifestyle, etc. Hence, there is no exception for planning retirement, even when the person has high income.

Early 40’s is the time when most of the people are in a better financial position and income is considerably more than the expense. On the other hand, it is also true that you have less time left to attain retirement. Therefore, it becomes difficult for many to accumulate for the retirement. Having said that, here are few steps to consider while planning your retirement in early 40’s.

Emergency fund
Emergency fund is something that you should have in-place at first. If you do not have it, then build it and if you have it then, review and upgrade it. Emergency fund helps you during temporary loss of income. Hence, having it at the first place would help your financial goals to be in order.

Insurance
As it is rightly said, that protecting wealth is way more important than wealth accumulation. The reason for the same is that, protecting wealth helps in smoothing the experience of wealth accumulation. Hence, protecting wealth via emergency fund and insurance is important. So, having life, health and property insurance is a must to make your way towards financial freedom. If you already have one then, review it and upgrade the same, depending upon your personal financial situation.

Pay off expensive loans
Expensive loans are something that causes hindrance in wealth creation. You can call this as one of the wealth destructors. Hence, paying off the expensive loans such as credit card and personal loan makes sense. So, consider paying off such loans to the soonest.

Financial needs
Once you are covered with emergency fund and insurances, the next thing you need to take care of is your financial needs, which is your responsibility to fulfil Personal needs such as child’s education, child’s marriage, etc. are required to be planned, save and invest money for. So, plan your financial needs and invest depending upon your risk profile and goal tenure.

Retirement
Now once you have done with it all, think about retirement. While considering planning for retirement, it is important to first understand the lifestyle that you would wish to lead while in retirement. Then, adjust the expenses for inflation and based on the return expectations, come forth with retirement corpus. Then, calculate the required monthly Systematic Investment Plan (SIP) or lump sum investment (depending upon your funds availability). Although, all these things might seem confusing, it is always better to seek help of an expert financial planner or retirement planner for that matter.