Planning For Your Retirement

Your retirement planning time horizon can be divided in to four major stages or phases:

a)      Accumulation and Growth Phase

b)      Transition Phase

c)      Consumption phase

d)     Transmission or ‘giving away’ phase

One fundamental question you will face is when to start ‘investing’ for your retirement.  Logical answer is soon after you receive your first ‘income’ or ‘salary’.  Provident fund contribution is a statutory contribution mechanism for organised work force.  From your very first salary, you and your employer would start contributing in to this account.  For the present, it is a tax free accumulation and growth enabling system.  What about unorganised sector of employment?  If you belong to this category, or otherwise also, you can open ‘Public Provident Fund’ Account and begin your contribution.  This also is a tax free account to help you in the first phase retirement planning. Those of you who wish to take exposure to equities in your primary retirement account, you can look at NPS.  Importantaly, before opening the account, make it a point to understand clearly how the account works and its limitations.

When you should start contributing additional amount for retirement planning?  Well, the answer again is immediate, generally.  There would be certain situation in your life and career when you will be unable to do this.  If you want to pursue higher education or if you are a business person or a professional starting your own practice, you will be cash strapped and would be unable to commit additional resources.  Work with your financial planner to chalk out an action plan to fund your retirement account optimally.


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