Once you have finalized the goal of retirement planning, you can connect with an investment advisor to plan towards your goal. However, one smart strategy is to be prepared with some basic idea about the plan, so that you are able to have a meaningful conversation with your advisor:

Basis your current financial status, you would be able to figure out:

1. Your current savings rate per month and how much of this savings can you invest in mutual funds basis your risk appetite

2. Your current expenses per month and expected expenses in retirement per month

3. Time to retirement – years remaining during which you can invest so that you have a decent corpus to withdraw per month, which allows to maintain your expected lifestyle

Don’t worry if you are not really sure about these aspects, a good financial advisor can help you with these aspects. This guide provides you balance perspective on how to go about retirement planning depending on your current age & other factors.

Age: Youthful 20s

Life situation:

• Most likely, you have started earning recently

• You may have a lot of aspirations with the new flow of cash stream each month

• Your pay scale may not be very high and savings may be low

• Your family may have some expectations of monetary help

Recommendations:

• Enjoy life, keep some money aside each month exclusively to enjoy your bucket list

• If you have education loan, focus on paying off the loan first before starting investments

• Buy a plain vanilla term life insurance – you would get it super cheap since you are young, and would lock your premium price for your entire life. This would provide a great safety net for your family in case of any unfortunate event.

• No matter how much you are earning, try saving at least 20% of your income each month. Of course, higher the better.

• Out of whatever you are saving, invest 50% in equity mutual funds if your risk appetite and personal situation allows. Try to save at-least 5k per month towards this, of course, higher the better

• Since you have just started earning, retirement is unlikely to be in your mind, but starting the investments is very important. Earlier the better. Of course, at this age, not at the cost of your personal goals – be it a foreign trip with friends, buying a bike, saving for marriage or education of your younger siblings. But try with at least 20% of your income. You can assign your corpus to various goals letter.

• Since you are starting early – time will help you in compounding, but it really works.

• If you understand mutual funds, you can shortlist the funds to invest yourself. Else you can connect with a good investment advisor who would support you in your wealth creation journey

Here is a table demonstrating how much you can accumulate if you invest various amounts starting at the age of 24 and expected returns of 11% over long term:

So if you start investing Rs. 5000 per month at the age of 24, you are expected to have Rs 29.3 lakh by the age of 40. However, your corpus would be much more if you increase the investment amount.

Age: Eventful 30s

Life situation:

• Most likely, you are now decently settled in your career and have a fairly stable income

• You may be already married or may about to get married soon

• Larger ticket size purchases are now closer in the horizon – buying a house, buying a car etc.

• You are likely to become a parent in this decade

• Once in a while, a passing thought would come regarding retirement, although it may be vague enough

Overall recommendations:

• If you have not already purchased a term life insurance plan, buy it immediately

• If you have any outstanding loans, other than a car loan or a house loan, try and pay the loan first before starting investments

• Try saving a larger proportion of your salary to fund the big ticket size purchases in near future- house, car, vacation etc.

• Start allocating a small capital towards retirement. You may start with Rs 10k, of course, higher the better.

Here is a table demonstrating how much you can accumulate if you invest various amounts starting at the age of 30 and expected returns of 11% over long term:

Age: Responsible 40s

Life situation:

• You are well settled in your life and financial responsibilities towards your family are now quite clear

• Most likely, you have started thinking more actively towards retirement

Overall recommendations:

• If you have not been investing in SIPs till now, connect with an investment advisor immediately to plan investments

• If you have significant investments in fixed income securities e.g. FDs, re-evaluate if you can move a proportion of that to equity mutual funds, as the returns are likely to be higher over long term

• Start allocating a decent capital towards retirement. You may start with Rs 10k or more if your budget allows

Here is a table demonstrating how much you can accumulate if you invest various amounts starting at the age of 40 and expected returns of 11% over long term:

Age: Gentle 50s

Life situation:

• This is your decade where most of the important financial outflows of your life will likely happen- be it education for child(ren), their marriage

• Retirement is planned in near future

Overall recommendations:

• Try to complete any outstanding loans as soon as possible

• Manage your cash flows well for the big ticket spends

• If you have not already started investing for retirement, now is the time to plan it seriously, speak to an investment advisor immediately. You should be investing at least 10-20k per month if you have started retirement planning recently.

Here is a table demonstrating how much you can accumulate if you invest various amounts starting at the age of 50 and expected returns of 11% over long term:

Age: Golden years – 60s and beyond

• Now is the time to enjoy the fruits of your hardwork during your working life

• Basis your investments till now, you would have accumulated size-able corpus by now, which you can start utilizing responsibly towards your regular expenses

• Many people also get gratuity and one time pay-outs at the time of retirement, it is recommended that you invest the same to ensure stable cash flows in the long term. Connect with a trustworthy and good financial advisor if you need help.

• You can seek an investment advisor to setup an Systematic Withdrawal Plan (SWP) for meeting your day to day expenses through monthly or quarterly payouts

Some general tips:

• Unless you are fully convinced, avoid investing in plans which promise you an assured amount after a fixed time, most likely, the assurance is coming at the cost of better return opportunity

• Avoid mixing Insurance and Investments e.g. ULIP plans etc. It is better to buy term life insurance for insurance and invest separately in mutual funds for long term goals

You can calculate the capital that you would be able to accumulate basis SIPs or lump sum investments using SIP calculator. You can find these with simple google search, however, I am recommending calculator on the below website because of its simple and clean interface:

Other Points to note:

Please note that you don’t need a demat account to invest in mutual funds and the KYC process for mutual fund investments is comparatively simpler.

Moreover, mutual fund industry is highly regulated to protect the interest of investors and there are lots of checks and balances in place to protect your invested amounts.

If you don’t have the required expertise to shortlist the right mutual funds or adequate time to monitor performance of your mutual funds on periodic basis. It is recommended that you seek an investment advisor who can handhold you through the investment journey and monitor the portfolio performance for you.

Advisors get compensated by mutual fund companies and they are not allowed to take any amount from the clients for suggesting the funds.

Looking for personalized guidance for your mutual fund investment journey?

We, at Goel Investment Advisors, help you with just that.

Our mission is help investors select the right mutual funds and invest for long term to build wealth and meet all financial goals.

Disclaimer: This article is written with specific investor personas in mind and provides indicative guidelines, which may not be suitable for all investors. Please connect with investment advisor for personalized guidance. Read all Mutual fund related scheme documents carefully before investing and after analysing the suitability to your requirements.

• https://cleartax.in/s/mutual-fund-calculator

• https://groww.in/calculators/mutual-fund-returns-calculator

For SIP:

1. Enter the amount you can invest per month towards your goal

2. Select frequency: If you plan to invest monthly, which is most preferred mode for many investors, select monthly

3. Enter the expected return – Generally 10 to 12% is a decent return assumption. You may end up getting better returns if you are good at shortlisting funds yourself or have a good advisor. However, it is not recommended to plan your goals with a higher expectation.

4. Time Period: Enter the time in years for which you will invest towards your goal

For lumpsum investments:

1. Enter the amount you can invest in lumpsum towards your goal

2. Enter the expected return: Generally 10 to 12% is a decent return assumption. You may end up getting better returns if you are good at shortlisting funds yourself or have a good advisor. However, it is not recommended to plan your goals with a higher expectation.

3. Time Period: Enter the time in years for which after which you would need the money towards your goal

Starting with Retirement Planning

This retirement guide is divided into following sections:

1. Starting with retirement planning

2. Age: Youthful 20s

3. Age: Eventful 30s

4. Age: Responsible 40s

5. Age: Gentle 50s

6. Age: Golden years - 60s and beyond

7. General tips

8. SIPs and Lumpsum investments

9. Other points to note