Hoping to retire in the distant future? Start planning today

Question: What is the ideal time to retire from your career?

Answer: There is no ideal time.

With proper financial planning, backed by certified and reliable financial experts, you can choose when you want to retire. It’s important to remember that the quality of your life post-retirement mustn’t be compromised. You should be able to meet your health-related costs comfortably and have the financial freedom to spend your golden years the way you want to.

Retiring from a job does not equate to retiring from indulgences. Planning beforehand can give you the freedom to spend your retired years indulging yourself. Maybe you want to travel, start something new, get involved in charitable causes, or do something you’ve always wanted to do but couldn’t, owing to life situations and/or financial constraints — you can do any of these, provided you plan for your retired life while you are still working.

Factors to consider while planning your retirement

The sooner you put a retirement plan in place, the more comfortably you will retire. But once you reach the age of 50 or so, you simply must have a financial plan in operation. You have to give yourself enough time to diversify and grow your assets. Besides, you need to calculate your debt and make sure you pay it off as soon as possible.

Even if you are eligible for a pension, you will be living with a reduced income, and you will need to supplement it with returns from investments you make while you are still working. Optimizing your assets early on in your professional life can make all the difference between a happy retired life and a stressful one.

Here’s a ready-reckoner of the steps you can take to not only retire at a time of your choosing but also ensure that your retired life is comfortable and stress-free.

Evaluate your present financial status

First off, review your present financial situation. Take into account all your property, your movable assets, bank accounts, and retirement savings. Then evaluate your outstanding debt. Draw a budget for the present and the future. Identify the gaps, if any, in your retirement income. Then consider measures to fill the gaps.

Start investing

No matter how much you earn, it will not be very wise to assume that you can plan for your retirement just on the basis of your savings. Even if you are frugal by nature and habituated to saving, chances are you will not accumulate an amount that will be sufficient to take care of your retirement needs. You have to make your savings grow, which means investing them wisely.

A well-balanced portfolio of stocks, bonds, and mutual funds will ensure good returns over a period of time. In addition, you need to safeguard your life and health by taking adequate insurance coverage. This is critical to ensure that an unforeseen tragedy does not derail your life and that of your loved ones. In order to protect your retirement nest egg, go for long-term insurance, which can give you a lump sum by the time you retire. The younger you are when you buy insurance, the lower your premium will be and the easier it will be on your pocket to pay the premiums.

Get rid of your debt

By the time you approach your fifties, you have to start taking debt repayment seriously. It could be credit card debt, a vehicle loan, a home loan, or any other kind of liability. If mortgage payments are due, consider accelerating the payment, so that you can pay off your loans well before you retire. Avoid going for new loans, so that your retirement income is not spent on paying interest on debt. Reduce your discretionary expenses, if necessary, to ensure that your retirement is debt-free.

Keep in mind that your retired life might last at least 15-20 years, factoring in the increasing life expectancies globally. You have to make your retirement savings outlive you — you should not have to spend even a fraction of it servicing a debt.

To conclude, you need to take cognizance of the fact that it is never too soon to start planning your retirement. The sooner you start planning and investing for it, the sooner you can retire, at times earlier than you previously thought was probable.