To sustain your retirement plans even during these trying times, it is essential to review your goals and be aware of the right time to start saving for your retirement. If you are far away from the retirement age, it would be a good idea to start planning early. However, if you are close to retirement, it is time to review your retirement planning closely.
How COVID has Impacted Saving
Apart from the health issues, COVID-19 has ruined the financial plans of many around the globe. The four pillars of finance: income, expense, savings and investment, have changed drastically with the risk to income being most significant. With less flow of income, it has become more difficult than ever to contribute to future savings or investment planning.
Why Saving for Retirement is Important Now
Experts suggest that, at present, if we do not take retirement planning seriously, there are strong chances it could cause irreversible damage to our future financial plans. It is crucial that we trim down on our expenses wherever possible, especially those who could face a potential job loss or income cut.
The lockdown made us cut down our expenses such as shopping, daily commuting, eating out, etc. You can use this to your advantage to reduce the expenses and invest in a retirement plan, instead.
Age-Wise Retirement Planning
As per your age in the current COVID era, here are the following retirement planning suggestions:
1. If You Are In Your 20s
Considering that you are in your mid to late 20s, this is an excellent time to give a thought to retirement planning. You might want to enjoy life at the moment, but if you manage to start saving from now, you will be able to build a robust corpus for your post-retirement years. Moreover, if you purchase a retirement plan in your 20s, you can pay a lower premium.
2. If You Are In Your 30s
As you have now become more mature and responsible for your family, you may be planning for life insurance, also commonly known as death insurance, that will offer financial security to your loved ones in your absence. However, considering your retirement plans at this age would also be wise. Your aim should be to build a financial corpus without any load on your twilight years. Also, the longer you invest, the more interest you will be able to generate, ultimately leading to more savings.
3. If You Are In Your 40s
According to experts, your 40s is a good age to start investing in retirement plans. You have two decades more to build a substantial corpus for your retirement. However, you might also have current expenses such as your children’s education or marriage, or any other health requirement. In such a scenario, it is important to be conservative with your investment and consider both present and future needs while investing.
4. If You Are In Your 50s or Beyond
It is never too late to contribute to your savings. You can invest in a retirement plan even in your 50s. However, at this age, you need to be more aggressive with your savings. If you do not have any solemn financial obligations, you can put huge chunks of your income directly into a savings fund to start building an adequate corpus for your post-retirement years.
If necessary, you can also consider delaying your retirement by a few years so that you reach the desired corpus. Saving early will help you reach your financial goals; however, executing as well as improvising your plans as per the prevailing situation will help you sail through the current phase of economic hardships smoothly.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.