Retirement & Financial PlanningJul 27, 2015•3 min read
Retirement Planning: Just Starting to Save
Practical first steps for building a retirement savings habit, from automatic contributions to choosing the right tax-advantaged instruments.
Tejas Shah
Proprietor of Silicon One and Silicon Systems, AMFI-registered Mutual Fund Distributor since 2004, based in Vadodara.
Although retirement may be decades away, now is a great time to start preparing — the sooner you begin saving, the more time your money has to work for you. Most financial experts agree the key to saving is paying yourself first: a good rule of thumb is to save around 10% of pre-tax income every year toward retirement, starting small and automating contributions if the full amount feels like too much at once.
Build an emergency fund alongside retirement savings
Set aside three to six months of take-home pay or expenses in a separate, easily accessible interest-bearing account, so an unexpected cost doesn't force you to dip into retirement savings.
Where to save
Tax-advantaged options include ELSS, insurance, NSC and PPF, with NPS a good starting point for salaried employees and ELSS for the self-employed. For 2015-16 the combined limit was Rs. 1,50,000 under Section 80C plus an additional Rs. 50,000 in NPS. Without an employer plan, an option like a Reliance Retirement Planning Fund can fill the gap.
The sooner you start, the more you'll have for retirement, and the easier it becomes to keep saving a priority.
#retirement planning#financial planning
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