We all want to enjoy our retirement in peace in our dream house with loved ones. But, most of us don’t know if we will have enough funds to live a peaceful life after retirement.
There is a simple 30-30 retirement concept or 30-30 retirement challenge that tells you when you should start planning for your retirement. Most youngsters these days are unaware of the 30-30 challenge of retirement. Let’s find out what this is and what can you do to enjoy a happy retired life,
What is a 30-30 retirement challenge?
We all earn almost 30 years of life, from 25 to 55 years. At this stage, we can earn, save, spend and invest in creating the retirement corpus so that it can be used at the time of retirement, which will be almost 30 years of our lives, assuming the life expectancy of 85 years when we usually depend upon our savings.
If you are in your 20s or 30s, it does not mean that you should have to wait until you reach your 50s. Retirement planning needs to be done from your first salary to avoid challenges like;
- Working even after retirement
The need to be able to pay for your daily expenses is not going to end on your retirement. So, If you do not plan to retire, you have to work even after retirement to meet your daily need. As you can see, the whopping inflation rate increases the prices of goods and can harm your power to purchase overtime without any retirement planning.
- Moving to the smaller cities
Managing your expenses post-retirement is the most critical and challenging part of life. Moving away from metro cities to smaller cities can lower your daily expenses to a great extent. But smaller cities mean slower life, lower facilities, and lower costs.
If you want to avoid the hassle of moving to and fro from metro cities to smaller cities, you need to start planning your retirement now. And the best way to make sure that you have enough corpus for retirement is by making saving habits and investments in retirement plans.
- Unexpected medical expenses
Healthcare expenses are one of those which are rising day by day. And it is a major cause of firing bills in older age. It simply means you need better retirement plans to cope with all the unexpected expenses. It can be a problem even if you have health insurance due to higher inflation rates of health care facilities. Even a few days’ hospital stay can make a hole in your pocket. But, you should not panic because of these reasons.
Benefits of starting your retirement planning in your 30s
It is never too early to start saving regarding retirement investment. The earlier you start, the more you invest, and your retirement savings will have that much more time to grow. It is a fact that usually, people do not pay much attention to retirement planning. However, you must need a retirement plan to have hassle-free financial stability and secure retirement. There are some vital benefits of starting your retirement plan as early as possible;
- An early start will help to grow your investment
To reap the maximum benefits of your retirement plan, you will need to start investing early. And you should consider inflation before deciding on any retirement plan. Because during your retirement, you may need an income four or five times more than the income you need now to run your monthly expenses.
- Compounding benefits
The concept behind compounding is “make money on your money”. Compounding is when the money you earn from your investment is reinvested for the opportunity to earn even more. And by investing in a retirement plan, you can have even more benefits from the power of compounding with tax-deferral.
Your retirement account has the potential to grow faster because the money you would have paid in the taxes on earnings each year will remain in the account, and can earn additional money by compounding interest. The earlier you start, the longer your money has a chance to grow by compounding.
- High-risk investment for better retirement security
Invest in high-risk investment options like stocks and bonds for better retirement security. Now, that majority of people are investing in high-risk instruments to generate better ROI on retirement savings. Modern retirement plans not only offer equity allocation but also allow the option of rebalancing asset allocation.
Ultimately, investing in mutual funds and equity over a long period can help you overcome these retirement challenges. Just keep in mind your retirement goals and needs before investing in any retirement plan to enjoy a hassle-free and secure retirement.
- Goal based investment plan for extra safety:
Instead of just investing for the sake of it. Have a fixed retirement goal. Decide your corpus and detailed retirement plan and then use goal based investment features to accumulate a significant amount for your retirement. This will be a lesser risk investment for extra security.
More often than not, people postpone retirement planning because they think retirement is very late and they will somehow accumulate enough wealth without investing. But retirement is a very real and inevitable scenario how well prepared you are for it will decide how financially secure you are in your later years.
Read more: Zen And The Art Of Investing
Watch/hear on YouTube: The 30-30 challenge of retirement
