8 Secrets Of Retirement Planning


8 Secrets Of Retirement Planning

Many people want to retire in their late forties, but only some of them are in a position to actually take a retirement at that age. They don’t have a net worth and own much debt that need to be repaid before retirement. In such a state, it becomes almost impossible taking a break from routine job life and go ahead and live a peaceful life.

The formula for financial success is a sum of three easy-to- understand steps:

  •  Investment done
  •  Growth rate
  •  Time of investment

Unfortunately, few people are able to amass wealth as they hardly pay any attention to converting these principles into actions. The real challenge isn’t in understanding, but in translating that understanding into meaningful results. So, if you plan to retire early with a big corpus, this article is for you.

Reasons for Early Retirement

First of all, it is important to analyze what are the reasons that prompt people to think of early retirement. Well, the reasons can be many, some of which are listed below:

  •  Boring office routine which no longer brings any excitement
  •  Confidence of living a comfortable life with amassed wealth
  •  Frozen lifestyle with no additional expenses
  •  Plans to leverage hobbies and secondary skills
  •  Seeking more time with family

As seen, the reasons for early retirement may be reasonable, but the question is can one actually retire in mid-forties without having some backup and planning. Even you have this question in mind, and therefore, you are reading this post to take an informed decision. It is obvious that people need a healthy corpus to retire, which in turn needs careful planning.

What is your plan?

The first mistake that people commit is they don’t prepare a written plan of how they will build financial security. A study conducted by ‘Harvard Business School’ revealed that the 3% of contributors with written plans produced ten times the results as against the 83% of members with no clearly established goals. A written plan with clearly defined plans offers the road map to early retirement.

People can always design this plan based on different financial stages in life. These stages are appropriately classified as:

  • Aggressive accumulation in early career
  • Constant growth of net worth during semi-retirement
  • Spending of amassed wealth during retirement when there is no source of income

The plans of how to manage the assets and income will differ in each financial stage, thus demanding a unique plan. So, people should be flexible, and keep their mind open to accommodate with the changing conditions.

Compound Interest, Not Debt

People, who prefer lifestyle over income, compound debt and not interest. They get into the illusions and trap of wealth and find it tough to enjoy the freedom of real wealth. The problem is they seek to look rich rather than becoming rich. Accumulate assets and don't prefer lifestyle over financial security. The first step in the wealth building is the accumulation of assets. Disciplined savings and frugality are the pillars of financial freedom. Consumer debt is the reverse of debt and should be avoided in any case. It results in enslavement for a lifetime in the name of false wealth.

Invest In Financial Intelligence

Before designing any plans and then putting them into actions, it is first necessary to gain financial knowledge. What people know impacts significantly on how much they earn. So, it is must to invest a part of your income in financial intelligence. The important step in building capital is the rate at which capital grows. It is mainly a result of financial intelligence, and therefore people must learn before they can invest and earn. They can sail through any market condition if they know what they are doing and where they are going. Investment in financial intelligence earns profits for a lifetime. People should regularly invest in their financial intelligence by enrolling in courses, researching and reading so that they can carefully plan for early retirement. Remember, a little knowledge can prove to be a risky thing.

Procrastination as always should be avoided

Another element in wealth accumulation process is the time within the wealth compounds. By procrastinating investment process, people will only reduce the amount of corpus that they can intend to build before retirement. In fact, there can be a significant difference in retirement corpus only due to a little procrastination. Each day wasted is corpus lost. Don’t ignore the power of compounding because it is a remarkable wealth-building tool. Funds grow geometrically but only when it has adequate time to work.

Tax Deferred Retirement plans

People should maximize contributions from income to tax-deferred retirement schemes. It is rather a hassle-free mechanism to save because people hardly miss what they never had. The contribution directly moves into the tax-deferred retirement schemes. Moreover, if an employer has a savings program, people can save enough to grow their free money. In fact, by following this approach, investors can make some easy savings which cost far less as there is no tax shadow on it.

Risk management

It is important to implement aggressive, offensive investment plans strategy to amass wealth because the ultimate goal is to grow wealth faster than the rate of inflation. Just opting for safe investments won’t help. While it is imperative to practice aggressive investing it does not mean investors should take all risk by investing in risky instruments. In simple words, investors must balance both aggressive as well as defensive investment plans to pursue gains beating inflation without unwarranted risk of loss.

Investment Products Classification

As mentioned earlier, retirement has two stages, accumulation, and distribution. In the accumulation phase, people amass the funds needed for post-retirement, wherein in the distribution phase, the corpus is divided to meet the post-retirement needs. Some of the pre-retirement investment products are NPS, EPF, equities, ETF, and bonds. In the list of post-retirement investment products comes SCSS, monthly investment schemes, pension plans, reverse mortgages and liquid funds. Of course we believe that the best option would be to let Wixifi run the portfolio allocation for you. Planning for early retirement is important but planning early for retirement is critical, and people find it tough because the concepts are easy to understand but extremely hard to live by. Following them is the solution, and also a big problem.

How can Wixifi help? You can use the Wixifi system to determine how much risk you should be taking and investing as and when you have the funds. The more you continue to invest the closer you will be to retirement. We look forward to your questions or any help you might need in planning your retirement.


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