How to save Money for Retirement

No one can hope for a steady income throughout life. The earning potential significantly comes down during old age and hence you can never overlook the importance of saving money for retirement. With proper planning, this is never a difficulty.

What you must know on saving for retirement

• To save for retirement, it is never too early or too late.
• When you are starting to save money for the future, try to save as much as you can.
• If you are already nearing the retirement age, you must increase the percentage of your saving.
• Nevertheless, the earlier you start saving for retirement, the better for you.
• Even if you have started late there are ways to increase your retirement savings.

Tips on saving for retirement

Never wait for it. Start saving for retirement today. Saving, investing, and reinvesting can move you forward successfully. If you can invest a good amount of money when you are young, it is going to benefit you immensely during your old age.

Contribute to EPF

If you are a salaried employee and if your employer contributes to EPF, nothing like that. You are already travelling safely. However, ensure that you do not withdraw or take loans from the EPF accumulations. If you take loans from EPF or close it down before you retire, the whole purpose of EPF is falsified. Also, contribute to EPF as much as you can.

Senior Citizens' Saving Scheme (SCSS)

This scheme is the most popular choice for retirees. Available only to senior citizens or those that retire early, you can avail of the SCSS from a bank or post office. Those retiring early avail of this scheme within a month of receiving their funds on retirement.

Post Office Monthly Income Scheme

POMIS is a five-year investment. The maximum cap of this investment is Rs 9 lakhs in case of joint ownership and Rs 4.5 lakhs in case of single ownership. For every quarter, the interest rate is set. It is roughly about 7.8% at present. The interest is payable monthly. The interest amount can also be credited to the same account.

Fixed deposits

FD or bank fixed deposits are yet another popular choice among retirees for saving money. FDs are easy to operate. They are safe and provide fixed returns in a risk-free way. Though the interest rates are falling with the years passing by, senior citizens get to earn an extra percentage of interest. In terms of tenure, fixed deposits also offer flexibility.

Mutual funds

Following retirement, the non-earning period might extend to two decades or more. Hence a portion of the investment needs to be backed by equity. Retirement income will be subject to inflation. Equities assure returns that are inflation-adjusted and are a better choice in several regards.

Tax-free bonds

Tax-free bonds are issued to government-backed institutions. These are listed securities and hence can be sold on stock exchanges. Since tax-free bonds mature only after 10, 15 or 20 years, you must make sure you will not need the invested funds in between.