The first step would be to make a list of your assets and liabilities. Assets could be property, gold, cash, and existing investments in debt and equity. Liabilities could be loans and tax payments.
Once you have the necessary information, it is helpful to ascertain which of these investments would last till retirement. For example, gold value typically appreciates with time, so this could be a beneficial investment for retirement expenses.
After deducting the liabilities, you need to calculate the funds needed after retirement. The funds would have to be adjusted against the rate of inflation. If this sounds complicated, the Standard Chartered retirement planning calculator could come in handy.
One factor to be considered is that your current monthly expenses would increase by two to three times by the age of 60 years. This is due to medical expenses and rising inflation rates.
Let’s take an example. Say your monthly expenses are Rs 50,000 at present. Even if you have accumulated Rs 10 lakh at the age of 30 years, an inflation rate of 10% could make these investments inadequate. You will need a corpus in excess of Rs 5.4 crore to meet your post-retirement expenses, considering the monthly expenses increase by 2.5X by then.
A mix of mutual funds and insurance could help achieve your wealth creation goals for retirement. These are some investment options:
- Mutual funds: Buying mutual funds could help you enhance your retirement kitty. Retirement-specific mutual fund schemes invest in debt and equity to maximise returns by the age of 60. If it is an equity MF, long-term capital gains are exempt up to Rs 1 lakh. You can use the Standard Chartered SC Invest platform to invest conveniently in mutual funds. .
- Health insurance: Medical expenses can eat into your corpus. So, having medical insurance is always beneficial. Insurance premiums increase as you get older, hence buying a policy in your 30s and renewing it every year will make it easier. Opting for health plans that protect against critical illnesses could be ideal. Standard Chartered offers an array of health insurance plans that you could choose from.
- Unit-linked insurance plans: Investing in investment-linked insurance products can help in wealth accumulation over the long term. Ulips are one such option to consider. These plans offer the dual advantage of a life cover and wealth creation. If you wish to know more about such plans, Standard Chartered insurance solutions could offer a sneak peek into the benefits. In addition, pension plans by insurance companies are another option to save for retirement.
There is a 30:30:30:10 rule that is often cited for retirement investments. Here, 30% is for your retirement expenses, 30% for inflation, 30% for the inheritance for your children, and 10% for emergencies. This could be tweaked based on your existing wealth corpus.
Over and above retirement investments, it is also beneficial to set aside at least six months of post-retirement monthly expenses for emergencies. A rule of thumb could be to look at your current monthly expenses and multiply them by 2.5-3. For example, if your monthly expense is Rs 60,000, you may need to accumulate at least Rs 10.8 lakh for post-retirement emergencies.
Saving an additional sum is always more advantageous than not having enough. Standard Chartered’s market insights could help you keep a track of the latest developments and plan accordingly.
Having a systematic and automated contribution mechanism can also help you save a fixed sum consistently every month. And as your salary increases periodically, it is useful to increase the investment quantum proportionately. Safer investments, with a mix of debt and equity, that offer sustained returns can sometimes be preferable over high-risk, high-return investments. Every rupee counts.
This article is for information and educational purposes only. It is meant only for use as a reference tool. It has not been prepared for any particular person or class of persons. The products and services mentioned here may not be suitable for everyone and should not be used as a basis for making investment decisions. This article does not constitute investment advice nor is it an offer, solicitation or invitation to transact in any investment or insurance product. The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment. Prior to transacting, you should obtain independent financial advice. In the event that you choose not to seek independent professional advice, you should consider whether the product is suitable for you. You should refer to the relevant offering documents for detailed information.
Standard Chartered Bank is a distributor of mutual funds and referrer of other third party investment products and does not provide any investment advisory services as defined under the SEBI (Investment Advisers) Regulations, 2013 or otherwise. Investments are subject to market risk. Read scheme related documents carefully prior to investing. Past performance is not indicative of future returns.
Standard Chartered Bank, India having its principal place of business at Crescenzo Building C-38/C-39 G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 is a licensed Corporate Agent of ICICI Prudential Life Insurance Company Limited (IRDAI Reg No. 105) for life insurance products; Royal Sundaram General Insurance Co. Limited (IRDAI Reg No. 102) and ICICI Lombard General Insurance Company (IRDAI Reg No. 115) for general insurance products and Niva Bupa Health Insurance Company Limited (IRDAI Registration no. 145) for standalone health insurance products vide corporate agent number CA0028. All insurance products are underwritten by the respective insurance companies. Participation of Standard Chartered Bank clients in any insurance scheme is purely voluntary, and is not linked to the availment of any other banking products or services from the Bank. The benefits/ features of the products are indicative only. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding sale. Insurance is the subject matter of solicitation.
