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What are the Steps that need to Followed to Create a Retirement Budget in India?

Submitted by admin on June 29th, 2024

Evaluating for retirement is very important so that one is not a burden to his or her family and can live comfortably in the remaining period of life. Budgeting a retirement plan is important so that one does not budget beyond his or her means and yet be comfortable at the same time. Below is a step-by-step example of how to come up with a retirement budget.

Where are you now? Evaluate Your Finances.

Namely, only when you know your current situation together with the financial resources you possess, you can strive to plan for the future.

Revenue Sources: Compilation of all the present income sources inclusive of wages/salary, rents, interests on saving and investment, Dividends, and any other income that is currently being received.

Expenses: Record your current spending for a specific month and separate and group them into necessary and unnecessary expenses.

Asset: Add up the total value of your savings accounts, fixed deposits, mutual funds, stocks, real estate, bonds, and any other investment you may have.

Liabilities: In a record any pending balance that may comprise of loans, credit card balances, and other liabilities.

Estimate Your Retirement Expenses

Estimation of your future expenditures forms the next step in electricity tariff planning. Consider the following categories:

Basic Living Expenses: The necessities one cannot do without are food, shelter, either rent if they are renting an apartment or home, utility bills if you own a house, and transport.

Healthcare Costs: Medical insurance, annual check-ups, prescribed drugs, and any vacation to a specialist or any exercise that will be done with the doctor’s consent.

Lifestyle Expenses: These include; hobbies, travels, eating out, and other related leisure activities.

Charity: Donation and Friends and Family loan

Inflation: Subtract a healthy inflation rate to enable it to cater for the inflating prices of goods and services. An average inflation rate of 5 to 6 percent could be expected in India and about 1 to 2 percent on lifestyle inflation.

Calculate Your Retirement Income

Identify potential income sources post-retirement:

Pension: If you are a civil servant or work in the private sector and you intend to or already contribute to a pension plan, you should estimate the expected amount of monthly pension.

Investments: This one was used for estimating returns from fixed deposits, mutual fund investments, shares such as stocks, and others.

Rental Income: The other income is the rent received from the rental properties; one has to forecast for rents and also include for vacancy and obsolete expenses.

Retirement Benefits: As you know India has very limited social security benefits when compared to western countries but you may look at any such benefits you may have like EPF, PPF, Gratuity Superannuation.

Hence, it is understood that having a retirement budget is a good idea that should be developed thoroughly and reviewed constantly. It can thus be seen that by performing a current credit and expenses review, forecasting annual expenditure after retirement, evaluating probable annual income post-retirement, and determining the retirement corpus, one can plan for a comfortable and secure post-retirement phase. Be disciplined, follow your budget consecutively, and make sure to change it whenever there is a need if you are to survive your golden years.