Smart planning for your retirement early in life will make you free from money woes in the later stage. By staying focused on building a solid retirement plan and making habit of sticking to the plan, you will definitely put yourself in a better position to have a retirement that allows you to achieve your goals. Indians are the most risk averse and this tendency attracts them to fixed return instruments which in the long run fail to build wealth although it gives guaranteed returns, although small. This is because, these returns fail to overpower inflation. And with youngsters calling it quit by the age they reach 40, timely and adequate planning in early stage of life has become essential for living a comfortable and decent life and making you happy.

So here’s how you should start planning for retirement at different phase of life.

Age 20-30 years:

During this phase of life individuals do not think of retirement planning, but it is highly recommended to save and invest small amount of money for retirement. Here are the tips:

• Start creating a budget and at the same time learn the tricks to save for retirement. And make this a priority.
• You should be insured for both health and life plans adequately. And health insurance should be the top priority irrespective of your current age. Check out health insurance for senior citizens.
• Take higher investment risks at this stage with higher allocation to equities and mutual funds as they help in long term wealth creation and income generation. Opt for retirement linked MF.
• Make fullest use of power of compounding and take full advantage of it.
• Invest in provident fund and start monitoring the contributions.
• This is the best age to buy life insurance policy as premium would be small. If you buy later, premiums would rise and returns too would be less.

Age 30-40 years:

• This phase of life is when you are grappling with various financial commitments. This mainly includes bringing up your child and buying or rebuilding your house, loan repayment etc.
• Insure your assets especially – home and motor. You should also increase your premium for protecting the content of your house as well. This will safeguard your assets such as jewelry, other expensive belongings etc. Motor insurance (two and four wheeler) is often not taken seriously. In case of need, it will save you money as insurance companies bear the risk. Read tips on saving money after taking home loan.
• Continue with the existing health and life cover. You can also increase sum insured by taking add-ons, adding new family members. This will save you money at the time when hospital bills are huge, as your insurance company will pay for the same.
• You should have a plan ready for closing your loan account.
• Keep on assessing your investment portfolio every 6 months especially mutual funds or equities. This helps in making changes to the same, if required.

Age 40-50 years:

• You will start feeling that retirement is nearing and along with comes the time to seriously look into the investments and shortfalls. If need arises, you should fulfill the gap.
• Evaluate your retirement plan and if not, create one. Although it’s too late but still you can have a decent living even after investing at this age.
• Explore options that can protect you from inflation.
• Making your will and adding list of beneficiaries for all the assets owned by you.

The best retirement plan is the one which starts paying you money the moment you stop working for money and most importantly this money is tax efficient. This is the reason why products favouring accumulation with tax exemption has always been in demand. Read best jobs for retired people.

So invest money in products that are tax free at the time of redemption and best products are employee provident fund (EPF) and public provident fund (PPF). Other investment avenues are:

• Retireent linked mutual funds
• Systematic withdrawal plans
• National savings certificate (NSC)
• Bank deposits
• Traditional life insurance plan
• Unit linked plan
• Whole life insurance
• Infrastructure bonds issued by public sector enterprises

Always remember to start early and be smart by investing in mix of financial instruments for maximizing the returns and make you self reliant during retirement year. Your focus should be to have all that is necessary for a making you financially comfortable during this phase of life so that retired person should not outlive the corpus accumulated at the time of retirement.