Retirement Planning at Various Life Stages



We are glad to have you with us for our 6th Session (of the Retirement Planning Series) on 'Retirement Planning at Various Life Stages'.

Alright so let's get started...

Each one of us dream of living a comfortable and peaceful retirement. But realizing a peaceful retirement is a lengthy process. It takes deep planning and years of determination from the start of your career to help you manage your finances and life style during your retirement years.

In this session of money simplified, we will tell you how you can give a good start to your retirement in order to live a self-sufficient and peaceful retired life.


Why Retirement Planning?

  • You would agree that retirement is an important phase in each one's life
  • Since you cannot avoid it, retirement planning is imperative to remain financially independent, secure and to maintain a healthy and comfortable standard of living during this phase where you may not be having regular flow of income

  • Timely planning for retirement is very important so that funds are sufficient till your demise. This includes taking care of day-to-day expenses as well as any medical emergencies that may arise as your age progresses

Here's how you should go about Planning Your Retirement at Various Stages of Your Life...


25-35 years left to your retirement...

  • You are probably in the age group of 25-35 years

  • Which means you are in the accumulation phase of your life...You are young and have another 25-35 years of working life before you retire

  • You should look for wealth creation in the long run since you have sufficient time before you hang your boots

  • Apart from retirement, you may also have other financial goals in the interim such as: buying a home, car, getting married and even save to begin a family and eventually start planning for your child's future needs. Given such a scenario, you would need to prioritise each of your financial goals

  • You need to form a habit of living within your means and give yourself a cushion so that you don't fall into the trap of excessive credit and unreasonable expenses

  • You should insure your life adequately through a decent Term insurance plan

  • Buy medical insurance if you are still single, or a family floater if you are married and have children

  • Nevertheless, with sufficient time until your retirement, you can afford to take a higher risk with your retirement savings. So there is scope to position your portfolio aggressively by allocating 65%-85% of your portfolio in equities and around 5%-20% in debt

  • Based on your preference, you may also hold around 10% to 15% exposure to gold to further diversify your portfolio

    [The portfolio allocations mentioned are for illustration purposes only and should not be construed as investment strategies / investment advice. Investors should consult their investment advisor and construct their portfolios based on their risk appetite, time horizon, investment goals, etc.]

  • You may save through monthly SIPs in mutual funds to have a disciplined approach to investment. You may open a PPF account or invest in debt mutual funds for the fixed income portfolio

  • Any salary hike or tax refund or dividend and interest income can be ad-hoc investments which can be utilized for your intermediate goals

  • The earlier you start saving and investing, the greater would be the value of your retirement portfolio due to the power of compounding. You may even be able to retire earlier

15-25 years left to your retirement...

  • You are probably in the age group of 35-45 years

  • Which means you are in the mid-asset accumulation phase of your life

  • You may be planning to buy a house or may have already bought one or invest for your child's education.

  • If you own a home, make sure you pay off your loan before you near your retirement. You should ensure that the term of your loan does not exceed 20 years at any point of time or else you may find it difficult to pay off your loan before retirement

  • Also, buy a medical insurance, preferably a family floater to protect the health of your family

  • Moreover you should have adequate life insurance to cover all your liabilities or about 10x of your annual income. This will act as a provision to financially safeguard your family in case of uncertainty

  • You need to plan your investments well and stream line it towards achieving your financial goals. You should also talk to your spouse and make sure your retirement goal is compatible

  • While you should diversify your investments and maturity dates to optimize returns and account for risk; with a time horizon of around 15 to 25 years on your side, you can take a relatively higher risk to grow your retirement portfolio. Hence, your portfolio may be positioned in the moderately aggressive risk profile in the initial years

  • You can allocate 60%-70% of your portfolio in equity, 20%-35% in debt and hold around 5%-15% in gold

    [The portfolio allocations mentioned are for illustration purposes only and should not be construed as investment strategies / investment advice. Investors should consult their investment advisor and construct their portfolios based on their risk appetite, time horizon, investment goals, etc.]

  • You may continue with your monthly SIP in mutual funds

  • Continue contributing towards PPF and extend it for another 5 years if the maturity date is nearing even if your employer is already deducting your monthly contribution towards EPF. All your contributions towards fixed income generating instruments would turn into a key pension stream during your retirement

5-15 years left to your retirement...

  • You are probably in the age group of 45-55 years

  • Which means you are in the protection phase of your life

  • In this age bracket you may still have some life goals to fulfil such as your child's higher education, marriage or even moving into a bigger house

  • If you have accumulated enough wealth, you may even plan to retire early or travel to your dream destination; but ensure that your other dreams do not hamper your retirement plans


  • This is a phase when you need to streamline your finances - both inflows as well as outflows

  • Start maintaining sufficient contingency funds and have adequate medical insurance for yourself and your family. There should not be any slip-up on your finances

  • Moreover you need to keep aside sufficient funds for your retirement portfolio because there is a possibility that you may fall short on your retirement corpus, since you started late

  • Recalculate your required retirement corpus by using a retirement calculator. If you are falling short, you need to increase your monthly investments as far as possible, or else increase the return potential of your portfolio by having greater exposure towards potentially high returns generating instruments


  • But you also got to ensure that you are balancing your portfolio wisely.

  • Since you have a time horizon of 5-15 years, you may afford to take some amount of risk rather than being too conservative

  • Hence your portfolio can be positioned moderately by allocating 40%-60% of your portfolio towards equity, 35%-50% towards debt and about 5%-10% in gold as a hedge for your portfolio

    [The portfolio allocations mentioned are for illustration purposes only and should not be construed as investment strategies / investment advice. Investors should consult their investment advisor and construct their portfolios based on their risk appetite, time horizon, investment goals, etc.]

  • While you continue investing in equity mutual funds, you should also have reasonable exposure towards debt mutual funds. Also, do not forget to extend your PPF account for the next 5 years, if it is about to mature

  • Check with your employer on pension benefits or post-retirement benefits they provide such as Gratuity, Leave encashment, Superannuation, Pension, etc. Consider them in your retirement plan

  • Check if early retirement would have an effect on your pension plan. Calculate the impact! Moreover, have complete knowledge about your pension related investments and social security plans, so that you can take timely actions, when necessary

Less than 5 years left to your retirement...

  • You are probably in the age group of 55-60 years

  • Which means you are on the verge of retirement

  • You may have accomplished almost all your other financial goals. You have your own mortgage free house to live in comfortably, your children are well settled, and you have perhaps travelled to your dream destinations

  • You are into your final years before you hang your boots and soon, your regular source of income would stop

  • Hence, you ought to be conservative while investing your hard earned money

  • It would not be advisable to have high exposure towards equity as you are nearing retirement. You need to start cutting your equity exposure considerably and start shifting your portfolio towards lower risk fixed income investments

  • At this stage you should position your portfolio as 20%-30% in equity, 60%-80% in debt and 5%-10% in gold as a hedge

    [The portfolio allocations mentioned are for illustration purposes only and should not be construed as investment strategies / investment advice. Investors should consult their investment advisor and construct their portfolios based on their risk appetite, time horizon, investment goals, etc.]

  • While you may continue investing in equity mutual funds to match the above mentioned allocation, you should increase your exposure towards debt mutual funds and other traditional fixed income instruments

  • Your contingency corpus can be parked in liquid funds so that they may earn better returns than a savings bank account, and yet can be withdrawn in case of emergencies

  • Also make sure that you have paid off your loans by now. If not, pay off all your loans before retirement. You cannot afford to enter your retirement phase with liabilities to settle

  • And most importantly, continue paying premium towards your medical insurance since it may be difficult to get insurance at this age, due to health ailments, if any. So the best way is to pay your premiums regularly and continue.

  • If you do not have medical insurance, maintain a separate fund to take care of your medical needs

Already retired...

  • Probably you have completed 60 years and the conservation and protection phase of your life; which means you have entered the distribution phase of your life

  • By now you have limited income or no regular income and hence you need to dip into your savings and reserves that you have built over the years. Your savings and reserves would include the wealth accumulated in your PPF account, EPF account, Superannuation account, Fixed deposits, Small Saving Schemes, Mutual Funds, Gold ETFs etc.

  • At this stage your portfolio needs to be positioned conservatively so that your investments can take care of your retirement needs

  • Around 70% to 80% of your portfolio should be inclined towards fixed income generating instruments ...and aim for reasonably good inflation adjusted post tax returns

  • Some portion, say 10%-25% of your portfolio may still be in equities with a long term investment horizon of over 5 years and about 5%-10% in gold as a hedge in your portfolio

    [The portfolio allocations mentioned are for illustration purposes only and should not be construed as investment strategies / investment advice. Investors should consult their investment advisor and construct their portfolios based on their risk appetite, time horizon, investment goals, etc.]

  • Your goal should be to create a stream of cash flows to take care of your basic expenses. For this you need to calculate the money you need each month and which portion of your investment portfolio they can come from. For example, the interest and dividend income you receive on your investments can help you settle your utility bills and some day to day expenses.

  • Moreover, you should calculate and fix a monthly withdrawal amount which can be withdrawn initially from your low risk investments, while letting your other investments grow and earn in the later years. Systematic Withdrawal Plans (SWP) offered by mutual funds is also a good option to create a cash inflow stream post retirement.

  • The money you receive from Gratuity and Leave encashment from your employer on retirement can be invested in short term debt mutual funds to enable you to receive a regular income stream. You can start withdrawing from these instruments after 3 years or as and when you need money. However, ensure that the instruments where you invest this money offer sufficient liquidity.

  • Do not stop paying premium towards your medical insurance as you need it the most during your retirement. Some insurance companies provide health cover until the age of 70. Or else maintain a separate contingency fund to take care of your medical needs

  • Your contingency money maintained in liquid funds can take care of any other emergencies.

You see retirement planning is an on-going and life long process. It takes decades of commitment in order to enjoy the rewards during your golden years. The earlier you start the better it is.

So, as you aim to build a decent corpus for your retirement, you can follow the above guidelines and march forward in the journey to achieve a peaceful retirement.

So to end our learning exercise today, we now invite you to test your learning by taking up this simple quiz (and win exciting prizes!)

Just Click On The Link Below.


Thank You For Participating!

Disclaimer:
The Information contained in this video transcript is not a complete representation of every material fact and is for information purposes. All details are provided on a best effort basis. It is not to be used or considered to be an offer to sell or buy units of Franklin Templeton Mutual Fund schemes. This video transcript is for information purposes only, provided on an ‘as is’ basis. Nothing in it should be construed as personal financial advice. You are responsible for your own investment decisions and the recipient is advised to consult a professional financial advisor prior to arriving at any investment decision. The video transcript is for personal non-commercial use only and may not be copied, stored, redistributed or broadcast in any way. We recommend you read the complete Terms of Use of the website.

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