Retirement planning is essential for everyone, but it holds even greater importance for women. Factors like career breaks, the gender pay gap, and longer life expectancy make careful planning a necessity. While the process may seem challenging, women can take independent steps to secure their financial future.
Here’s how to set and achieve retirement goals effectively:
Assess Your Needs and Budget
The first step is to assess your financial needs. Estimate how much money you will require after retirement. Consider your lifestyle, inflation, and medical expenses. Think about your current financial responsibilities.
Adhil Shetty, CEO of Bankbazaar.com, says, “Create a budget to understand your spending patterns. Identify areas where you can save more. Allocate a portion of your income to retirement savings and stick to your budget, reviewing it regularly.”
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Start Early and Choose Investments Wisely
The earlier you start saving, the better. Starting early allows your money to grow over time. Compounding plays a key role in building a retirement corpus. Even small contributions can grow significantly over the years. Select investments based on your risk appetite and time horizon. Equity mutual funds can offer higher returns if you start early. Public Provident Fund (PPF), Employee Provident Fund (EPF), and National Pension System (NPS) are also good options. Diversify your investments to reduce risk.
Build Financial Security and Plan for Career Gaps
Build an emergency fund to protect your retirement savings. Save at least three to six months’ worth of expenses to manage unexpected situations like job loss or medical emergencies. Many women take breaks for personal or family reasons. Plan for these gaps when setting your retirement goals. Save more when you are earning to cover the periods when you may not contribute. Stay financially independent by having your own savings and investments instead of relying solely on your spouse’s income or retirement plan.
Maximise Tax Benefits and Health Security
Take advantage of tax benefits offered by various retirement savings options. Contributions to PPF, EPF, and NPS are eligible for tax deductions, helping you save money while securing your future. Stay updated with the latest tax rules and exemptions. Additionally, invest in a comprehensive health insurance policy to protect against rising healthcare costs.
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