Best printers for Home

Best Mixer Grinder

Best wired Earphones

Best 43 Inch TV in India

Best Wi Fi Routers

Best Home Theatre in India

Smart Watch under 5000

Best Laptops for Education

Best Laptop for Students

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 <ul><li>To <keyword id="7839787" type="UNKNOWN" weightage="20" keywordseo="save-for-retirement">save for retirement</keyword>, it is never too early or too late. </li><li>When you are starting to save money for the future, try to save as much as you can.</li><li>If you are already nearing the retirement age, you must increase the percentage of your saving. </li><li>Nevertheless, the earlier you start saving for retirement, the better for you.</li><li>Even if you have started late there are ways to increase your retirement savings. </li></ul>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.

How to save Money for Retirement

For <keyword id="159074" type="ORGANIZATION" weightage="100" keywordseo="RETIREMENT-PLANNING">retirement planning</keyword>, determining your <keyword id="775334" type="UNKNOWN" weightage="100" keywordseo="retirement-corpus">retirement corpus</keyword> amount is only half the work done. Any plan not backed by action can fall flat. So, you need to start investing for retirement once you have figured how much you need. 
 
Here’s how you should work towards accumulating your retirement corpus: 
 
1. Start investing early 
 
Take advantage of the power of compounding to amplify your investments. If you need to save Rs 5 crores for retirement in 35 years, then you need to invest Rs 13,060 per month for 35 years (at 10% p.a.). If you delay this by another 5 years, you will need to invest Rs 21,926 per month for 30 years. And with a further 10 year delay you will need to set aside Rs 37,370 per month. Thus, you can see the benefit of starting early; the monthly burden is lessened, when you have more time in hand. Don’t wait till your late thirties or early forties to start planning for your retirement. 
 
2. Do not play too safe 
 
Higher return is usually associated with higher investment risk. Our parents saved for their retirement by investing in safe products such as fixed deposits, EPF, PPF and traditional insurance plans which may not help you beat inflation when the returns are adjusted for tax. 
 
Using the same example, when returns are 8% p.a. you need to invest Rs 21,652 per month for 35 years, whereas you invest Rs 13,060 when returns are 10% p.a. If you settle an instrument that is safer but gives you 8% instead of 10%, you need to invest one and a half times the amount. 
 
3. Investment discipline is paramount 
 
It is easy to compromise on a financial goal that is still many years away. You might feel tempted to make a down-payment for a new car from your retirement corpus, because you’ve got time for retirement. In fact retirement savings are the first to get compromised in case of a short term cash flow crisis. 
 
It is essential to maintain investment discipline, set up SIPs and auto-debit instructions for investments in mutual funds, recurring deposits etc. 
 
4. Diversify your assets 
 
Although you need to invest in equity mutual funds, it does not mean you must invest exclusively in equity investments for retirement. Do not ignore other asset classes, having a 100% equity portfolio for retirement at the age of 58 is as or even more foolish than having a 100% debt portfolio, when you’re 25. 
 
An equity heavy portfolio near retirement, when the equity markets are in the bear period can lead to a lifetime of financial misery. Diversification across asset classes is important; start with an equity heavy portfolio and shift to debt instruments as you move closer to retirement. 
 
5. Review and rebalance your portfolio 
 
Review your portfolio regularly to see how your investments are doing and use this opportunity to eliminate underperformers. If your portfolio has underperformed, you may need to increase the investment amount. A bull or a bear run can skew the asset allocation, so you must review and rebalance your retirement portfolio at regular intervals. 
 
Based on your investment horizon and risk tolerance, you must keep 60% in equities and 40% in debt. If required, sell some equity investments to invest in debt products during a bull run and vice versa during a bear phase. 
 
6. Don’t have irrational expectations 
 
Don’t fool yourself! If you have 30 years to accumulate Rs 5 crores, you need to invest Rs 21,936 per month, at 10% p.a. and only Rs 2,140 per month at 20% p.a. But to expect 20% p.a. return for 35 years is a recipe for disaster. 
 
 
7. Purchase adequate insurance 
 
You do not just need comfortable retirement for yourself but for your spouse too. Purchase adequate life cover to ensure comfortable retirement for your spouse. You should also purchase adequate health cover to avoid a dent in your retirement savings due to prolonged hospitalization or illness. 
Additionally, also set up a medical emergency fund to cover medical expenses not covered under your health insurance plan. You can also maintain an emergency corpus of funds to tide over short term cash flow crisis. 
 
8. Let your children share some responsibility 
 
Parents would do anything to keep their kids happy. However, don’t go overboard. If you don’t want to depend on your children during retirement, let them share some responsibility. For instance, if you fall short of their higher education corpus or the amount required is more than you expected, ask them to take a loan to cover the shortfall. Don’t sacrifice your retirement savings! 
 
<a href="http://blogs-images.forbes.com/rbcwealthmanagement/files/2015/11/Retirement-Risks-1200x802.jpg">Image source</a>

8 Steps to plan your investments for retirement

Americans are wrapping up the year feeling pretty dismal about their <keyword id="415826" type="UNKNOWN" weightage="100" keywordseo="retirement-savings">retirement savings</keyword>, according to a new survey from NerdWallet: Less than a third say they feel good about how much they put away this year. 
 The year-end survey, which was conducted online by <keyword id="1268949" type="PERSON" weightage="100" keywordseo="Harris-Poll">Harris Poll</keyword>, found that while 70% of Americans are saving for <keyword id="25452" type="UNKNOWN" weightage="100" keywordseo="retirement">retirement</keyword>, only 21% plan to max out an individual retirement account like a traditional or Roth IRA in 2016. 
 Of those who have a workplace <keyword id="854889" type="UNKNOWN" weightage="100" keywordseo="retirement-plan">retirement plan</keyword> like a 401(k), only 15% intend to max it out. Both are opportunities that won’t come back around, as retirement plans have annual contribution limits that make it hard to make up for lost time. 
 
The potentially bigger problem, though, is that most people are unlikely to do better next year, with only 32% of those who have a workplace retirement account reporting plans to increase contributions in 2017. That’s despite potential 3% pay raises — the expected average, according to a survey of U.S. companies — and a median income that was up last year for the first time since 2007. 
 
But there’s still time to sing a more positive tune, and you can use the momentum of the New Year to help you. Here are three ways to make 2017 the year of the retirement savings comeback. 
 
1. Calculate retirement savings needs 
You can’t save for retirement if you don’t know how much you need for retirement; without running the numbers, you’re likely to save too little or too much. Though the results of the NerdWallet survey reinforce the fact that the latter scenario is relatively rare, it’s worth identifying a target. 
 
Luckily, this isn’t an exercise that requires math, or even pencil and paper. An online retirement calculator will quickly tell you how much you should save on a monthly basis based on factors you plug in: your income, age, expected spending needs and investment return. The next step is hitting that monthly target. 
 
2. Make small increases part of your annual routine 
The easiest way to save more is one step at a time, so consider this a new ritual: Take 10 minutes on Jan. 1 to bump up your retirement contribution by 1%. With all due respect to the old Southern tradition of eating black-eyed peas and greens to bring on luck and money, these incremental but annual increases will actually bring on money, in the form of investment returns. 
 
Consider this: NerdWallet’s math found that if someone earning $40,000 and currently saving 5% increases his savings rate 1% per year until he’s saving 15% of income — the typical retirement savings goal — he’ll have $1,053,455 after 40 years (the analysis also assumes a 6% return and 2% annual raises). That’s over twice what the same earner would wind up with had he held steady to that 5% savings rate. 
 
One note here: Some employers do this for you by automatically escalating your contribution to a 401(k) plan each year. If you’re worried about accidentally doubling your increase — though that wouldn’t necessarily be a bad thing — check in to see if your plan automates this before bumping the contribution up manually. (You can also try a 401(k) calculator to see how the numbers add up.) 
 
3. Use the right retirement accounts 
According to the NerdWallet survey, 55% of Americans who are saving for retirement — and 63% of those ages 18 to 34 — report doing so at least in part within a bank savings account. 
 
Those consumers could be missing out on the big tax savings of tax-advantaged retirement accounts, not to mention employer matching dollars in workplace plans and the opportunity to invest their money for a higher return rather than settle for a bank interest rate of 1% or less. 
 
Retirement savings dollars should always go into a workplace plan with matching dollars first. Once that match is fully captured, investors can consider a Roth or traditional IRA. The difference there comes down to taxes; generally, the money in a Roth will be more valuable. (To see just how valuable, plug your numbers into a Roth IRA calculator). 
 
If all retirement account options are maxed out for the year, the last stop for extra dollars is a taxable brokerage account. 
 
Read the <a href="https://www.nerdwallet.com/blog/investing/americans-anxious-about-retirement-3-tips-to-save-more-in-2017/">original article</a> on <a href="https://www.nerdwallet.com/">NerdWallet</a>. Copyright 2016. 
 
(Image Credits: Thinkstock)

3 tips for saving more for retirement in 2017

<ul class="summary-list"><li>A <keyword id="12454173" type="UNKNOWN" weightage="60" keywordseo="457-plan" source="Orion">457 plan</keyword> is a type of <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> plan offered by government and nonprofit organizations.</li><li>457 plans allow you to defer a portion of your pay, invest in various assets, and pay taxes upon withdrawal.</li><li>Many employers offer 457 plans in tandem with other retirement options.</li></ul>A 457 plan is a type of deferred compensation plan for workers in the government and nonprofit sectors. It allows employees to set aside a portion of their earnings, push back taxes on that income, and grow their money in the process."It's part of the retirement plan family," says Frank Murillo, partner and managing director at <a href="https://snowdenlane.com/" target="_blank" rel="noopener">Snowden Lane Partners</a>. "On the surface, think '401(k)' for government and nonprofit employees."Do you work for a non-profit or government organization? Here's what you need to know about 457 plans.<h2>How does a 457 plan work?</h2>With a 457 plan, you defer part of your income, use it to invest in <a href="https://www.businessinsider.com/what-is-an-annuity" target="_blank" rel="noopener">annuities</a> and <a href="https://www.businessinsider.com/mutual-funds" target="_blank" rel="noopener">mutual funds</a>, and grow those earnings until a later date. Only nonprofit and governmental organizations can offer 457 plans, though they can be used in tandem with other retirement accounts, including <a href="https://www.businessinsider.com/what-is-401k" target="_blank" rel="noopener">401(k)s</a> and <a href="https://www.businessinsider.com/what-is-403b" target="_blank" rel="noopener">403(b)s</a>.Related Article Module: The best retirement plans to use in 2021Contributions on 457 plans are largely made by the participant using paycheck deductions, but employers have the option to contribute funds as well. Either way, there's one set contribution limit across both buckets.Generally speaking, participant contributions are tax-deferred, meaning you pay taxes when you withdraw funds later on. With some governmental 457(b)s, which is one type of 457 plan we'll cover later on, you may have the option to designate <a href="https://www.businessinsider.com/what-is-roth-ira" target="_blank" rel="noopener">Roth contributions</a>, which are made using after-tax dollars.One standout advantage of 457 plans is that you can begin withdrawing your 457 funds as soon as you no longer work for the plan's sponsoring organization. This is quite different from other retirement plans, such as IRAs and 401(k)s, which require you to be 59 ½ before you can withdraw from your account. Quick tip: If you have a 457 plan, you'll have to take Required Minimum Distributions (RMDs) from your account starting at age 72. The exact annual amount varies based on your age, your balance, and other factors. Use <a href="https://www.investor.gov/financial-tools-calculators/calculators/required-minimum-distribution-calculator" target="_blank" rel="noopener">this calculator</a> to determine what you may owe.<h3>457(b) contribution limits</h3>The contribution limits for a 457(b) depend on your age. Once you hit 50 or when you're nearing retirement, you may be able to contribute significantly more depending on what you contributed in previous years.Here's how those contributions look:<table><tbody><tr><td>Age</td><td>Contribution limit</td></tr><tr><td>&lt; 50</td><td>100% of your salary or $19,500, whichever is less</td></tr><tr><td>50 or older</td><td>$26,000 ($19,500 + $6,500 in catch-up contributions) </td></tr><tr><td>Within three years of retirement age, as specified by the plan</td><td>$39,000 or the base limit ($19,500), plus the amount of your unused base limit in prior years, whichever is less</td></tr></tbody></table>Quick tip: The catch-up contributions allowed for participants 50 or older are only allowed if you have a governmental 457(b). If you're enrolled in a nonprofit 457(b), your limit will be $19,500.<h2>Types of 457 plans </h2>There are two types of 457 plans: the 457(b) and the 457(f). <ul><li>457(b): These are what the IRS refers to as "eligible" deferred compensation plans. They're subject to all IRS contribution limits and taxation rules, and both employers and participants can contribute to them. There's a 457(b) option for governmental employers, as well as a 457(b) for nonprofits and tax-exempt organizations.</li><li>457(f): These plans are also for nonprofits and government agencies, but they don't have to adhere to the IRS contribution limits. They're also fully funded by the employer, allowing employers to tie the benefit to performance, service duration, or other metrics. According to the IRS, these are sometimes called "golden handcuff" plans.</li></ul>"457(b) plans work very similar to a 401(k) or 403(b), where the elective deferral amount is funded on a payroll-by-payroll basis," says Brian Haney, founder and vice president at <a href="https://www.thehaneycompany.com/" target="_blank" rel="noopener">The Haney Company</a>. "For 457(f) plans, these are far more discretionary and often funded in a lump sum depending on when the employer chooses to fund them."<h2>Pros and cons of a 457 plan</h2>As with any investment account, the 457 plan comes with both drawbacks and advantages. One upside: They allow you to reduce your taxable income and defer taxes to a later date. If you think you will be in a lower tax bracket upon retirement, this can be financially advantageous.They can also be used in tandem with other accounts - another major perk."They become extremely helpful and valuable vehicles to allow for higher earners to further defer income towards retirement," Haney says. "Many highly compensated professionals max out their 401(k)s and 403(b)s and could use additional resources to save more."On the downside, some 457 plans don't allow rollovers to other retirement accounts. They also come with RMDs, and any employer contributions count toward the participant's annual limit. <table><tbody><tr><td>Pros</td><td>Cons</td></tr><tr><td><ul><li>Allows you to defer taxes</li><li>Large contribution limits, especially as your near retirement</li><li>Can be used along with other retirement accounts</li><li>Can allow Roth contributions</li><li>Allows withdrawals as soon as you no longer work for the employer</li></ul></td><td><ul><li>Come with Requirement Minimum Distributions</li><li>Some don't allow rollovers to other retirement accounts</li><li>Employer contributions eat into the participant's contribution limit</li><li>Lower contribution limits than other retirement plans (403(b)s go up to $58,000)</li></ul></td></tr></tbody></table><h2>457(b) vs. 403(b) </h2>It's easy to confuse 457(b) plans with 403(b) plans, as both are offered in the nonprofit sector. In some cases, employers may even offer both plans simultaneously.Despite this, the two are vastly different retirement options. For one, employer contributions and participant contributions come with different limits on 403(b)s. On these plans, both contributions can total up to $58,000 or 100% of the employee's salary per year (whichever is less).Rollovers are also permitted on all 403(b)s, but only sometimes on 457 plans, and 403(b)s come with a 10% penalty if funds are withdrawn before 59 ½. With 457(b)s, you can withdraw as soon as you no longer work for the company. Here are all the differences you'll want to consider with these two retirement options:<table><tbody><tr><td>457 plan</td><td>403(b)</td></tr><tr><td><ul><li>Employer contributions count toward the $19,500 participant limit.</li><li>Rollovers are permitted only on government plans.</li><li>Funds can be withdrawn as soon as you no longer work for the company.</li></ul></td><td><ul><li>Employees have their own limit of $19,500. Combined limits go up to $58,000 or 100% of the employee's salary.</li><li>Rollovers to other retirement plans are always permitted.</li><li>Withdrawals before 59 ½ face a 10% penalty.</li></ul></td></tr></tbody></table><h2>The financial takeaway</h2>A 457 plan is a type of retirement plan offered to non-profit and government employees. They allow you to defer income, invest in various assets, and grow your wealth for retirement. Keep in mind, though: They do have lower limits than some other retirement plans, so make sure to explore all your options. In many cases, you may be able to choose both a 457 and another plan to maximize your contributions. Talk to a financial advisor if you're not sure a 457 plan is right for your retirement goals. They can also assist in determining an appropriate contribution amount.<a data-type="61410b58e278c63e7610dcbb">Understanding what financial advisors do and how they help clients better manage their money</a><a data-type="6010872ff3299a36eb5e109c">A variable annuity can provide you with more retirement income, since its payouts rise with the stock market</a><a data-type="5fe0e060f74e306b4930ff7a">Opening a Roth IRA for your kids offers investment options, tax-free growth, and a great lesson in how to save</a><a data-type="6040f94cfec9aa1ad7381ab4">Backdoor Roth IRA: Understanding the loophole that gives high-income earners the tax benefits of a Roth IRA</a>

457 plans: The retirement option for nonprofit and government workers

<ul class="summary-list"><li>Roth 401(k)s and traditional 401(k)s are similar in many ways, but they differ in how your contributions and withdrawals are taxed. </li><li>Traditional 401(k)s offer up-front tax breaks; you pay the IRS on withdrawals when you retire. With Roth 401(k)s, you pay taxes on deposits, in exchange for tax-free withdrawals later.</li><li>When deciding between a Roth and a traditional 401(k), your age, current tax bracket, and projected retirement income all come into play.</li></ul>Do you have access to an employer-sponsored 401(k) plan? If so, your plan may include a Roth 401(k) option as well. Since 2006, the IRS has allowed companies to offer this variety of <keyword id="3596341" type="PERSON" weightage="60" keywordseo="retirement-account">retirement account</keyword>, which combines many of the best features of a Roth IRA and a traditional 401(k).A 2018 survey by the <a href="https://www.psca.org/" target="_blank" rel="noopener">Plan Sponsors of America (PSCA)</a> found that 70% of 401(k) plans now offer a Roth version. Yet, PSCA reported that only 23% of plan participants chose to contribute to them, suggesting that <a href="https://www.businessinsider.com/benefits-of-roth-401k-2017-6" target="_blank" rel="noopener">Roth 401(k) plans</a>, while getting more accessible, are still somewhat of a mystery.Here's a breakdown of the differences between Roth 401(k)s and traditional 401(k)s, along with a few scenarios that will help you weigh which best suits your <keyword id="159074" type="ORGANIZATION" weightage="60" keywordseo="RETIREMENT-PLANNING">retirement planning</keyword>. <h2>Understanding the similarities and differences</h2>Roth and <a href="https://www.businessinsider.com/what-is-a-401k" target="_blank" rel="noopener">traditional 401(k)s</a> are similar in many ways. They're both retirement saving plans with the same annual contribution limits, and both require minimum distributions at age 72 (unless you're still working). Neither have income limitations.The money in each account grows tax-free, and you usually have the same investment options (mutual funds, ETFs, etc.) for both — whatever the plan sponsor offers.<h3>How Roth and traditional 401(k)s differ</h3>The key difference between a Roth and traditional 401(k) comes down to how your contributions and distributions are taxed. Traditional 401(k)s are pre-tax accounts, meaning the money comes straight "off the top" of your paycheck. As a result, you receive a current-year tax reduction of your income. In return, you'll pay income tax when you start withdrawing money, usually after you retire.A Roth 401(k), like a <a href="https://www.businessinsider.com/personal-finance/what-is-a-roth-ira-tax-advantaged-retirement-account" target="_blank" rel="noopener">Roth IRA</a>, is a post-tax account: Your contributions do not lower your taxable income in the year that you make them. However, on the flip side, all qualified distributions — IRS-speak for withdrawals — of your earnings are tax-free. Here's how a Roth 401(k) and 401(k) differ on paper:<div type="image" title="401k" height="6546" width="5001" msid="78438500" hostid="261"></div>One thing to keep in mind is if your employer <a href="https://www.businessinsider.com/401k-vesting-schedule-employer-match-retirement-plan-rules-2019-6" target="_blank" rel="noopener">matches a portion</a> of your traditional 401(k) contributions, there's a strong chance that it may offer the same match for your Roth 401(k) contributions as well. One catch, though: the company's match can only go into a traditional 401(k) account. And, since it'll be considered as made with pre-tax dollars, this money will be taxable when you withdraw it.<h2>Roth 401(k) vs. traditional 401(k): Which plan is best for you?</h2>The most important question to ask yourself when comparing Roth and traditional 401(k) plans is "Do I expect my <a href="https://www.businessinsider.com/personal-finance/what-tax-bracket-am-i-in-federal-income-tax" target="_blank" rel="noopener">tax bracket</a> to be higher or lower after I retire?"If the answer is "lower," then a traditional 401(k) could make a lot of sense. But if you expect to have a higher tax rate in retirement, a Roth 401(k) could be the better choice.Two main factors could affect your tax rate after you've stopped working. The first is your target annual retirement income. If this figure is significantly less than your income during your earning years, that could strengthen the case for the traditional 401(k). But the opposite would be true if you think you might actually be enjoying a greater income in retirement.The second factor to consider is future changes in income tax rates. Of course, that's out of your control, and in the hands of the IRS and the political powers-that-be. But, as <a href="https://www.schwab.com/public/schwab/resource_center/expert_insight/schwab_experts/robert_williams.html" target="_blank" rel="noopener">Rob Williams</a>, vice-president of financial planning at Charles Schwab says, current "tax rates are close to historical lows." Some economists and financial analysts predict that they are destined to rise in ensuing years. So it might be better to invest via a Roth 401(k) and take the tax hit now — especially if your retirement days are decades away. By going the Roth route, "you guarantee that you won't have to pay any taxes when you take the money out," Williams says — whatever the rates have risen to be.<h2>Reasons to choose a traditional 401(k)</h2>Here are three scenarios in which a retirement saver may want to choose the traditional 401(k) over the Roth option.<h3>You're currently in your peak earning years.</h3>If you expect your income to drop significantly in retirement, you'll probably want to stick to funding your traditional 401(k). "This is likely the case if you are in the peak of your career," with the capacity to earn and contribute the most, says <a href="https://www.brandonrenfro.com/virtual-financial-advisor/" target="_blank" rel="noopener">Brandon Renfro</a>, CFP® and retirement specialist.By choosing a traditional 401(k) during these high-earning years, you get a tax deduction right now, when it'll benefit you the most. Then when you retire and you're in a lower tax bracket, you'll also owe the IRS less on your withdrawals.<h3>You need to make withdrawals within 5 years of opening your 401(k).</h3>Unlike a Roth IRA, a Roth 401(k) is actually less flexible when it comes to the timing of withdrawals than its traditional 401(k) counterpart.You can begin making withdrawals from a traditional 401(k) penalty-free at age 59½. However, with a Roth 401(k), you'll need to wait at least five years from opening your account to avoid taxes and penalties (on earnings; you can withdraw your contribution amounts at any time). So if you open the account at age 58, you won't be able to make tax-free withdrawals until you reach age 63.For twenty- and thirty something workers, this won't be a concern. But if you're getting a late start on retirement savings or you've started working for a new employer near age 59½, you may want to stick with a traditional 401(k) to avoid this 5-year rule.<h3>You want to keep your options open.</h3>Finally, "another advantage of a traditional 401(k) is that you can convert it into a Roth," says R.J Weiss, CFP® and founder of <a href="https://www.thewaystowealth.com/" target="_blank" rel="noopener">The Ways to Wealth</a>.This is an important benefit that is unique to traditional 401(k) contributions. You can't make a Roth contribution this year and then decide five years down the road to convert the contributions back to a pre-tax traditional 401(k).But you can convert traditional 401(k) contributions to a Roth 401(k) at any time down the road, providing that you can pay the income taxes that will be due at the time. It's something to keep in mind if you think your tax strategy and financial situation might change. With this flexibility, you could wait to pay taxes on your 401(k) contributions until a below-average income year or after completing a move from a high income-tax state to one with lower tax rates.<h2>Reasons to choose a Roth 401(k) </h2>Let's look at a few situations when you might be better off choosing a Roth 401(k).<h3>You're young, with years of earnings ahead of you.</h3>When choosing between 401(k)s, Natalie Pine, CFP® at <a href="https://www.briaud.com/" target="_blank" rel="noopener">Briaud Financial Advisors</a>, says, "We typically recommend that younger clients use Roth instead of traditional because their money grows tax-free for such a long time."This is her recommendation even for a younger person who is currently in a high tax bracket. Why? "Because," she explains, "the tax-free growth usually overcomes the higher tax bracket over a long enough period of time."<h3>You're looking to maximize retirement benefits.</h3>Lowering your income taxes isn't the only way that a Roth 401(k) can save you money in retirement. For example, under current tax law, Roth distributions aren't included in the calculation for determining <a href="https://www.businessinsider.com/personal-finance/is-social-security-taxed" target="_blank" rel="noopener">taxability of your Social Security benefits</a>. And they also don't count as income in <a href="https://www.medicare.gov/your-medicare-costs/part-b-costs" target="_blank" rel="noopener">Medicare premium calculations</a>.<h3>You want to pass along tax-free money to your heirs.</h3>A Roth 401(k) can play a valuable role in your <a href="https://www.businessinsider.com/personal-finance/estate-planning-mistakes-i-see-people-make-as-financial-planner" target="_blank" rel="noopener">estate plan</a>. With a traditional 401(k), your heirs will need to pay taxes on distributions just as you would. And, depending on your asset balance, this could generate a significant tax bill.By choosing a Roth, you remove this tax burden for the loved ones who will<a href="https://www.businessinsider.com/inherited-ira-rules-options" target="_blank" rel="noopener"> inherit your 401(k).</a> Plus, if you don't plan to use the funds yourself, you can roll a Roth 401(k) into a Roth IRA to get around the age 72 minimum distribution requirement.<h2>The financial takeaway</h2>When considering the Roth 401(k) vs traditional 401(k), many people look at it as an "either/or" decision. But, actually, "You can hedge your bets by doing both," Rob Williams says. "Most employers will allow you to choose which percentage goes into the Roth and which will go into the traditional."If you'd rather not try to guess what your annual income or income tax rates will look like in the future, contributing to both types of 401(k)s in this way is the safest strategy. Otherwise, the younger you are, the more likely you are to benefit from contributing post-tax dollars to a Roth 401(k). But the pre-tax benefits of a traditional 401(k) could become more attractive as you age and your earning power increases.<h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/personal-finance/how-to-invest-in-a-401k-for-retirement" target="_blank" rel="noopener">Experts say your office 401(k) is the best place to start investing. Here's how it works.</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/pension-vs-401k" target="_blank" rel="noopener">Pensions and 401(k)s are totally different retirement savings plans, and one isn't better than the other</a></h3><h3><a href="https://www.businessinsider.com/401k-early-withdrawal">How to withdraw from your traditional 401(k) account early — the strategies to avoid penalties and fees</a></h3><h3><a href="https://www.businessinsider.com/rollover-ira-401k-rollover" target="_blank" rel="noopener">A rollover IRA can make retirement savings less complicated, no matter how many jobs you've held</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/how-to-invest-in-roth-ira" target="_blank" rel="noopener">How to invest in a Roth IRA for retirement and other financial goals</a></h3>

The difference between a Roth 401(k) and a traditional 401(k), and how to decide which retirement plan is right for you

More and more Indians aged 45-plus want an early retirement. As per a survey conducted by HSBC, around 61 per cent working population in India aged 45 plus want to retire in the next five years. 
 
Majority of the respondents cited work pressure, which was variably affecting mental and physical health. 
 
Global bank HSBC's latest edition of 'The Future of Retirement Healthy New Beginnings study' revealed that 43 per cent would like to spend more time with their family, while others want to travel and pursue other interests. 
 
However, a whopping 59 per cent cited work related pressures and issues as the reason for wanting to retire. 
 "People worldwide are recognising that retirement can be an opportunity for reinvention and new beginnings. Yet financial barriers are preventing many people from retiring when they would like to - or, in some cases, at all. Almost one in five people fear that they will never be able to retire fully, so the need for sound <keyword id="25456" type="ORGANIZATION" weightage="20" keywordseo="financial-planning">financial planning</keyword> is stronger than ever," HSBC India Head of Retail Banking and Wealth Management S Ramakrishnan said. 
 
Also, financial constraints are the biggest reason for those unable to retire, an HSBC survey revealed. 
 
However, 14 per cent of them believe they will be unable to do so. Majority of them said they cannot retire as they would struggle financially. 
The findings of the study bring out an urgent need for Indians to begin saving early and planning well for their retirement, the survey said. 
On the global front, the survey of more than 18,000 people across 17 countries worldwide found that the desire to retire is the strongest in Argentina (78 per cent), France (77 per cent), China (75 per cent) and the UK (75 per cent). 
 
(Image: Thinkstock)

Majority of Indians over 45 years of age want to retire in next 5 years over health and work pressure

Table of Contents: Masthead Sticky<ul class="summary-list"><li>Planning your <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> as early as possible is key to ensuring you're financially secure when you're no longer working.</li><li>When planning for retirement, many experts recommend transitioning your portfolio away from stocks and into bonds as you age.</li><li>How you save for retirement has important tax implications for you and your family.</li></ul>We all dream of a stress-free retirement as a way to enjoy our golden years. But getting there takes a lot of careful planning. And it's important to start early. When you plan for retirement, you're setting income goals and determining the course of action needed to achieve them. That means choosing long-term investment vehicles such as 401(k) accounts, IRAs, or annuities. The sooner you begin funding them, the more money you're likely to have when it comes time to retire. Following are the basic steps to take when doing your retirement planning.<h2>Step 1: Calculate how much you'll need for retirement</h2>Perhaps the biggest question in retirement planning is: How much do I need to save?" While every situation is different, <a href="https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire">Fidelity estimates</a> that retirees will need 10 times their salary in savings to retire in order to maintain the same lifestyle while still working.<table style="border-collapse: collapse; width: 100%; height: 198px;" border="1"><tbody><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">By age</td><td style="width: 62.6115%; height: 22px;">Salary amount you should have saved</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">30</td><td style="width: 62.6115%; height: 22px;">1x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">35</td><td style="width: 62.6115%; height: 22px;">2x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">40</td><td style="width: 62.6115%; height: 22px;">3x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">45</td><td style="width: 62.6115%; height: 22px;">4x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">50</td><td style="width: 62.6115%; height: 22px;">6x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">55</td><td style="width: 62.6115%; height: 22px;">7x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; height: 22px; text-align: center;">60</td><td style="width: 62.6115%; height: 22px;">8x your starting salary</td></tr><tr style="height: 22px;"><td style="width: 37.3885%; text-align: center; height: 22px;">67</td><td style="width: 62.6115%; height: 22px;">10x your starting salary</td></tr></tbody></table>The <a href="https://www.irs.gov/retirement-plans/plan-sponsor/benefits-of-setting-up-a-retirement-plan">IRS estimates</a> that most retirees should save enough to receive 80% of their yearly salary during retirement. Of course, everyone's situation is different. Two key factors will determine how much you need: when you want to retire and how you want to live in retirement.For example, if you want to travel more during retirement than you did during your working years, Fidelity recommends you may want 12 times your annual salary saved. If you plan on living more modestly, you may only need eight times. <a href="https://www.fidelity.com/products/retirement/widget/xfactor/retire_xfactor.html">Here's a helpful tool</a> from Fidelity that allows you to compute what your likely retirement needs are. Whatever you do, it's best to start saving as early as you can. Compound interest means that a dollar saved when you are younger can be as valuable as saving several dollars later in life.<h2>Step 2: Choose a retirement plan </h2>There are various retirement vehicles to choose from, which is a big decision that can affect how you save for retirement. From 401(k) plans to Roth IRAs, the options can be hard to parse. Steps to take when choosing a retirement plan:<ul><li>Experts generally recommend you first max out any retirement plan with employer-matching funds. Failing to do so is like leaving free money on the table. </li><li>Next, you want to consider the tax implications. A Roth plan makes sense if you think you'll have a higher tax rate in the future. If you think your taxes will be lower in the future, you may want to defer taxes on your retirement savings by using a traditional <keyword id="11898246" type="UNKNOWN" weightage="60" keywordseo="ira" source="Orion">IRA</keyword>, 401(k), 403(b). Keep reading to learn more about Roth plans.</li><li>Whatever plan you choose should generally have a diversified basket of equities and bonds. Most experts recommend your portfolio get more conservative as you age.</li><li>Whatever plan you choose, it's important to start saving as soon as you can, and fund as much as you can afford.</li></ul>Here are the different types of types of retirement accounts to consider:<h3>Employer-sponsored plans</h3>Employer-sponsored plans are retirement plans created under terms set by your employer. While the details of specific plans will vary, the two most common plan types are 401(k) and 403(b). Two types of employer-sponsored plans are: <ul><li><a href="https://www.businessinsider.com/what-is-401k">401(k)</a>s: This is a retirement plan that's commonly offered by many employers. They allow employees to allocate a portion of their pay directly into the account, with employers matching contributions up to a certain percentage. 401(k)s are usually tax-deferred, meaning contributions are not taxed, but withdrawals are.</li><li><a href="https://www.businessinsider.com/what-is-403b">403(b)</a>s: This is a type of retirement plan for workers in government, nonprofits, or religious organizations. Most plans offer investments in mutual funds or annuities. They are usually tax-deferred, meaning you pay taxes only when you withdraw your money. </li></ul>Since these plans are sponsored by your employer, details such as which assets are available will vary. Both 401(k)s and 403(b)s are funded with after-tax money, allowing you to make tax free withdrawals in retirement. The 2021 contribution limit for both 401(k) and 403(b) plans is $26,000 if you're 50 or older and $19,500 for everyone else.Related Article Module: The best retirement plans to use in 2021Many employers offer matching contributions for these two plans, meaning they'll match any contribution you make up to a certain amount. For example, if you make $50,000 at an employer offering a 2% match, they'll contribute $1,000 to your plan, but only if you do so too. Unless you have a Roth plan, you will pay taxes on your investment, but only when you withdraw the funds. <h3>IRAs </h3>An <a href="https://www.businessinsider.com/personal-finance/what-is-a-traditional-ira">IRA</a>, short for individual retirement arrangement, is a type of retirement account that's set up by an individual, not their employer. IRAs offer a variety of investment choices, from mutual funds to bonds. Below are several different types of IRAs: <ul><li><a href="https://www.businessinsider.com/what-is-roth-ira">Roth IRAs:</a> This type of IRA is funded with after-tax money, allowing for tax-free distributions in retirement. If you expect to have a higher tax rate in the future, or want your heirs to inherit money tax-free, you may want to consider a Roth IRA.</li><li><a href="https://www.businessinsider.com/personal-finance/what-is-a-traditional-ira">Traditional IRAs:</a> This type of IRA is the opposite of a Roth IRA in that it's funded with pre-tax money. This allows you to defer payment of income taxes on the money you save until you take distributions when you retire. This is a good way to reduce your taxable income now, while saving for retirement. If you expect your tax rate to be lower in the future, a Traditional IRA may be best for you.</li><li><a href="https://www.businessinsider.com/simple-ira">SIMPLE IRAs:</a> A SIMPLE IRA is an employer-sponsored IRA for employees of small businesses. It functions similarly to a 401(k) with details varying by employer.</li><li><a href="https://www.businessinsider.com/sep-ira">SEP IRAs</a>: A SEP IRA is a retirement plan that employers can establish on behalf of their employees. It can also be used by business owners or self-employed people as a personal retirement plan.</li></ul>"I'm a big fan of Roth IRAs and employer-sponsored Roth retirement accounts" says <a href="http://www.vittlaw.com">Loretta Vitt Dubova</a>, Attorney at Vitt Law Offices, PLC, who specializes in areas of estate planning, estate administration, and elder law. When someone cashes out the plan after inheriting it, "in many cases, a child or non-spouse beneficiary of a Roth retirement plan will not pay income tax," Dubova adds. This is in contrast to a traditional, non-Roth IRA where beneficiaries must pay income tax on distributions, she explains. <h3>Annuities</h3>An <a href="https://www.businessinsider.com/what-is-an-annuity">annuity</a> is an insurance product that provides a steady stream of money during retirement. You make a prepium payment or series of payments and choose whether you'd like payments in a lump sum or over time. Annuities income and investment gains grow tax free, too. Lifetime annuities are a good option for those worried about outliving their retirement savings. Quick Tip: Experts generally recommend a Roth 401(k), Roth 403(b), or Roth IRA plan if you expect to have a higher tax rate in the future, while a traditional retirement plan may make more sense if you think your future tax rate will be lower. <h2>Step 3: Select your retirement investments and start contributing </h2>Once you've selected your retirement vehicle, it's time to start thinking of what to invest your contributions in. Retirement accounts allow you to invest in a wide variety of assets, such as <a href="https://www.businessinsider.com/how-to-invest-in-stocks">stocks</a>, <a href="https://www.businessinsider.com/what-is-a-bond">bonds</a>, and <a href="https://www.businessinsider.com/mutual-funds">mutual funds</a>. But what should you invest in?Financial advisors usually suggest a <a href="https://www.businessinsider.com/how-to-diversify-portfolio">diversified portfolio</a>, which might include <a href="https://www.businessinsider.com/mutual-funds">index funds</a> that track major sectors or indices, such as the <a href="https://www.businessinsider.com/what-is-the-sp-500">S&amp;P 500</a>. In general, diversification among assets is important, with most investors typically increasing the allocation of bonds, which are generally less risky than stocks as they get older."The standard way of thinking is that asset allocation needs to get more conservative over time," says <a href="https://blog.iese.edu/jestrada/">Javier Estrada</a>, professor of finance at IESE Business School, who has done academic research on retirement planning strategies. However, "asset allocations need to be personalized depending on the individual's goals, portfolio holding period, and risk tolerance," he says. If adjusting your asset allocation mix over time sounds too complicated, you can invest in a target-date fund that does it for you. You simply choose the date of your retirement, and the fund will automatically rebalance your portfolio as time passes, making it more conservative over time. Estrada calls target-date funds "a good option for people with little knowledge of how to save for retirement" but notes that sophisticated investors, or those with a good adviser, may want the flexibility of doing their own reallocations.Regardless of the strategy you take, it's important to maximize your contributions each year that you can. It's especially crucial to take advantage of any employer match programs, because they are essentially a free way to magnify your investing impact.Quick Tip: Target-date funds automatically rebalance your retirement portfolio toward safer investments over time. This makes them a simple "set-and-forget" option for many people.<h2>During retirement: Withdraw funds at a sustainable rate</h2>No matter how much you save, if you spend too quickly you could spend your final years in trouble. And if you spend too slowly, you might not be able to enjoy the money you've saved. One common metric is the 4% rule. You spend 4% of your retirement savings in your first year, then only increase that figure with inflation. For example, if you have $1 million saved for retirement, in the first year you'd withdraw $40,000. If the inflation rate is 2%, then next year you'd withdraw $40,800, and so on. <a href="https://www.aaii.com/files/pdf/6794_retirement-savings-choosing-a-withdrawal-rate-that-is-sustainable.pdf">An influential study</a> by finance professors at <a href="https://en.wikipedia.org/wiki/Trinity_University_(Texas)">Trinity University</a> found this worked over every 30-year period from 1926 to 1994, for portfolios in their sample that had at least 25% bonds. <a href="https://www.rbcwm-usa.com/resources/file-687839.pdf">Updated versions</a> have also found similar results. While the bond-heavy portfolios are less likely to run out of money if stocks crash, they also grow more slowly than equity-heavy portfolios do in good times. That's one reason why many think that a 75/25 mix is far too conservative. Estrada researched this topic, <a href="https://blog.iese.edu/jestrada/files/2017/01/Buffett-AA-Global.pdf">finding</a> a 90/10 allocation remarkably successful for most investors. For investors seeking to "maximize the size of the retirement portfolio, there may be better strategies to follow" than simply adjusting more and more towards bonds as retirement approaches, he says. The <a href="https://www.fidelity.com/learning-center/personal-finance/time-bucket-strategy">Bucket Strategy</a> is another way to plan for retirement withdrawals. It involves withdrawing the money you'll need in the next few years into low-risk buckets. This is designed to avoid you selling too many assets after a market crash. Although it has many adherents, Professor Estrada <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3274499">found</a> it underperforms static withdrawal strategies on all four metrics he tested. Instead, he recommends periodically rebalancing your retirement portfolio. "Bucketing may be behaviorally comforting but financially suboptimal" said Prof. Estrada, adding "everything that bucketing achieves can be achieved by periodically rebalancing a portfolio, which also leads to additional benefits."Beyond asset-allocation strategies, it's important to understand the rules of your retirement plans. For example, most withdrawals from a 401(k) before age 59 ½ incur a 10% penalty. <h2>The financial takeaway</h2>The choices you make when retirement planning are some of the most important financial decisions you'll ever make because they will ultimately have a huge influence on your quality of life when you get older. It starts with thinking about how you want to live when you're older and then charting a path to get there, whether it's through an employer-sponsored 401(k), an IRA, or a range of other investment options.No matter what plan you choose, it's important to make the most of tax deferrals, employer matches, and other ways to make the most of your retirement funds. And remember to adjust your portfolio over time, moving out of riskier assets in favor of a more conservative allocation as you get older.<a data-type="6143a04d6f685c22dc25603a">How to open a Roth IRA in 3 steps to start saving for retirement</a><a data-type="613b6ad74dde6122a564f7a3">Traditional IRA vs. Roth IRA: What's the difference?</a><a data-type="5c9108c901df722d966ff305">A comprehensive guide to investing in stocks for beginners</a><a data-type="613b6c304dde6123556001d2">403(b) vs. 401(k): What's the difference?</a>

3 steps to start building your own retirement plan

<a href="https://www.businessinsider.com/category/rethinking-retirement"></a><div type="image" title="Headshot Martin A. Scott" height="2216" width="2955" msid="91130719" hostid="261"></div><ul class="summary-list"><li>As a financial planner, helping clients reach <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> is a key part of my job.</li><li>To get them there, I start by factoring inflation, investment returns, and more into my projections.</li></ul>Regardless of their age, about every client (and prospective client) of mine has stated that one of their primary goals is preparing for a secure retirement. Given that most of my clients are in their 30s and 40s, they do not know exactly when they want to retire because this event can potentially be 25 to 30 years from now. However, there is still much <keyword id="12368569" type="UNKNOWN" weightage="60" keywordseo="financial-planning" source="Orion">financial planning</keyword> value to provide to clients as they make progress toward achieving their retirement goals.Here are three ways I provide guidance to clients and help them stay on track as they build wealth for retirement.<h2>1. I set reasonable assumptions within retirement plan projections</h2>Within their service to clients, most advisors use some type of financial planning software, which has a feature that provides retirement plan projections (e.g., probability of success). Many times, an advisor will show a client the projections based on what the client is currently doing and then subsequently show how the projections will improve with a recommended change (e.g., client increases retirement plan contributions, client works more years, etc.). An advisor must make several assumptions when doing this type of analysis for a client: <a href="https://www.businessinsider.com/personal-finance/average-stock-market-return" target="_blank" rel="noopener">investment returns</a> on a client's portfolio; inflation rates going forward; level of Social Security benefits; and length of an individual's retirement (i.e., how long they will live). My primary rule of thumb in this planning area is to lean toward being very conservative with these assumptions, which can provide clients a more realistic picture of what to expect going forward. Take the following example.John and Mary are both age 40 and have been married for 10 years. They have two children and are making efforts to save for future tuition costs, but also want to prioritize their own <keyword id="13613020" type="UNKNOWN" weightage="60" keywordseo="retirement-planning" source="Orion">retirement planning</keyword>. They hire a financial planner to do a detailed retirement plan analysis for them. Within these projections, their advisor specifically assumed investment returns lower than historical averages (for their risk tolerance in their investment portfolios) and higher than average inflation rates, which both had a negative impact on their progress toward their retirement goal. As a result, this analysis encouraged John and Mary to make more of an effort to save more toward retirement to counter these types of potentially unfavorable situations and still meet their goals.<h2>2. I help clients understand that there will be constant changes going forward</h2>Providing retirement plan projections to clients is a prudent exercise and provides much value to them, but every number and assumption that goes into this type of analysis will inevitably change. Even further, the level and timing of these changes are simply unpredictable. This can be frustrating to clients and advisors, but it is the reality of financial planning. There will be both quantitative (e.g., tax laws, market volatility) and qualitative (e.g., personal situations, health) changes throughout the years approaching retirement, especially when the time horizon is far out. I encourage clients to understand that nothing is set in stone and to remain flexible, which will allow them to adjust to whatever changes they face going forward.<h2>3. I make sure clients have the proper wealth protection in place</h2><keyword id="11916946" type="UNKNOWN" weightage="60" keywordseo="insurance" source="Orion">Insurance</keyword> might be the least-discussed strategy when addressing retirement planning, but it is the most important. Having <a href="https://www.businessinsider.com/personal-finance/what-insurance-do-i-need-every-age" target="_blank" rel="noopener">proper insurance</a> in place ensures that retirement goals do not get derailed in the event of an unfortunate occurrence or circumstance. Over the course of a long horizon of 25 to 30 years, many types of things can happen. Life can take many twists and turns. Maintaining adequate protection of wealth — in the form of insurance — is clearly a prudent decision, but it can also bring peace of mind to an individual who knows that their overall financial plan can withstand adverse events. The following example shows the impact of a wealth protection vehicle.Mike and Beth are both in their late 40s and have been married for over 20 years. Their son, Joe, just graduated from college, and they have funded his tuition completely for him over the last four years, which is quite a financial accomplishment. In addition to no more tuition payment obligations, Mike and Beth also maintain sizable retirement accounts, which will allow them to retire early. One evening, Mike gets into a car accident and is at fault. The person in the other car is seriously injured and is suing him for a substantial amount of money, which can be a real threat to the couple's overall savings. Mike is found liable in court, but fortunately Mike and Beth followed the advice of their financial planner and purchased an umbrella insurance policy, which provided them the extra liability coverage needed for this situation. As a result, they still were able to maintain their retirement savings and continue forward toward their goal of an early retirement.

I'm a financial planner, and I do 3 things with every client to make sure they can retire exactly when and how they want

We all know that we must start investing money, but very often procrastinate about it. If you are in your late twenties, it is high time to take stock of your financial life and start investing NOW. We delude ourselves with excuses when it comes to managing our finances. Well, it’s time to stop that. 
 
It seems all fun and games when you are a child and when you are older, life feels more like a chore. Responsibility is often a dirty word that you try your best to avoid and if you are still in your twenties, there is a general perception that there is enough time later to take up the so-called responsibilities. 
 Pawan Chawla is 29 and is working in a telecom company after finishing his MBA. As the regional head of his sales teams, he takes his work and partying seriously. Although he earns a good amount, he does not have many investments apart from the statutory ones made by the company on his behalf, such as the <keyword id="76579" type="CITY" weightage="100" keywordseo="PPF">PPF</keyword> and some shares he had bought on the recommendation of his friend. 
 
Like many of us in their twenties, Pawan is deluding himself with lies. Here are some money lies that we must stop telling ourselves before we turn 30. 
 
1. I don’t need <keyword id="6362363" type="ORGANIZATION" weightage="100" keywordseo="health-insurance">health insurance</keyword> 
Everyone needs health insurance. There is no age criterion for ill health or misfortune. Hospital bills can be exorbitant and can set you back financially. Meanwhile, the annual premium of a health insurance policy of Rs 3 lakh will be less than Rs 4,000 for a 29-year-old. So do not delay health insurance any longer. 
 
2. I can save for my retirement later 
Sure you can! However, a few years down the line your expenses will be higher as you are likely to have a family and dependents. It is very likely that you would be paying off EMIs on a home loan. Therefore, by starting your savings earlier, you are taking advantage of the power of compounding, which helps your money grow at a much faster pace when invested over a longer period. For instance, if you invest Rs 1 lakh today and it earns an interest of 12% per annum, it will be nearly Rs 30 lakh (without adding another rupee from your side) after 30 years. But the same Rs 1 lakh will be merely Rs10 lakh after 20 years. Go to any calculator on the Internet and understand the magic of computing. 
 
3. I don’t have time for investments 
We all lead busy lives and unless we are financial consultants, we have time-consuming careers that have nothing to do with managing investments. What we forget is both our money and our future are at stake here. And we need to take some time out from our hectic lives to monitor things. A financial advisor can help you take good decisions about money and investments. You will also find a number of financial software that will help you manage your investments. 
 
4. Missing a few payments is no big deal 
Missing a credit card bill or an EMI payment means a negative marking down of your CIBIL credit score. It also means when you want to avail a home loan or a personal loan in the future, the bank will check your credit report and may either refuse your loan application or charge you a very high rate of interest. A poor payment record will affect your credit score and the ability to get loans for a great length of time. 
 
5. I will start saving after I get married/have kids 
Waiting for a milestone in life to start saving is like trying to catch the train after it has left the platform. Start small but start now. Increase the amount you put away in investments whenever you can. Most importantly, do remember that you need to invest and not just put your money in a low interest saving account if you want your money to grow. 
 
About the author: Rajiv Raj is the director and co-founder of <a href="http://www.creditvidya.com/">www.creditvidya.com</a>.

Want To Plan Your Life? Stop Telling Yourself These Money Lies

While the developed World has done a lot of work to support people reaching the age of superannuation and have set up strong support systems for the elderly to help combat their loneliness, we are still in early stages of recognizing the challenges of retirement, leave alone understanding the symptoms of retirement and aging. 
 As I started to plan my own <keyword id="6360041" type="ENTERTAINMENT" weightage="20" keywordseo="life">life</keyword> post retirement, I decided to put down some of the issues that I have grappled with all my life and moving forward, I knew that I would have to address these challenges and resolve them to my own satisfaction. 
 
Unclutter your life 
 
You have spent the first two decades of your life studying very hard to achieve what you have today. You have led a very busy working life for over three decades and enjoyed every moment of it. Every year you have told yourself that this year is the most crucial year for you and if you get what you are hoping for, you will slow down. You have supported your family admirably. 
 
When did you stop to think about yourself? And your spouse? Most of us have spent our lives running from airports to hotels. Have you had a chance to stop and see the sights of the city you are visiting? Or sample the specialty cuisine of the city or country? Now is the time to stop to take stock of your life. To smell the roses and breathe in the fresh air. 
 
Remove negativity 
 
So much of our time is spent in criticizing friends and family. We seem to revel in the problems being faced by our near and dear ones. We love to gossip about others and we tend to get hurt by what someone may have said about us even though we may not have directly heard this. 
 
Now is the time to cut out the negativity in our lives. Our negative thoughts is not hurting anyone else – only ourselves. You may not say positive things about another but you can definitely stop saying negative things. 
 
Stop collecting. Start giving 
 
In the words of Socrates, “He is nearest to God who needs the fewest things.” 
 
You have collected and hoarded all your life. You have never given away anything. Remember that you don’t need most of what you have. Be generous. It is time to start giving away. If you have not used something for 6 months, it is highly likely that you will not use it all. 
 
Clear your calendar 
 
You have lived a life which has been driven by schedules, your assistant and your watch. You have not had a moment to call your own. It is time to clear up your calendar of unwanted and unnecessary activities and commitments that you have had every day of your life. 
 
Aspire to reach a stage where you are no longer a slave to someone else’s time or dependent on when another person will be able to “fit you in”. So practice saying no to excessive demands on your time and don’t feel guilty about injecting a dose of leisure time into your daily routine. 
 
Keep free time for yourself 
 
How often have you thought to yourself “I wish I had more time to do things that I want to?” Your time is your own. You are the master of your time and you must never allow anyone else to determine your priorities. 
 
Between work commitments, family commitments, social commitments and so many other commitments most of us after three decades of working look back and think of what we may have achieved had we given ourselves the time that we think we deserve. 
 
Free time for myself is very valuable and I look forward to my time alone. Now is the time to free yourself and give yourself all the time you ever thought you needed. 
 
Meditation and Yoga 
 
Meditation is very therapeutic in setting the mind at peace. Sitting down to meditate will allow you to introspect on the previous day, your life, your biases, your likes and dislikes and your negative thoughts. A combination of yoga, meditation and introspection will do wonders for your mind and body and will give you a lot to look forward to every day. 
 
Hobby 
 
Today is the time for us to restart our hobbies. Pull out your stamp and coin album to organise your collection. Pick up your camera, your favourite music instrument and start playing again – you may sound screechy and noisy but it is a matter of time before the rhythm comes back and the noise becomes music. 
 
Play card games or chess, golf or tennis, go out sampling different cuisines and write a blog about your experiences, take in the sights of your city or visit other cities that you have wanted to. You have the earned your freedom. 
 
Play 
 
As a wise man said, “You cannot be young all your life but you can certainly be immature for the rest of your life”. 
 
You may be chronologically getting close to superannuation but mentally you don’t need to be there. Remember that age is only a number and you are only as old as you feel. Get back in touch with your real, playful self, and take every opportunity to play! Notice how it makes everything so sweet, and so simple. 
 
Have you tried to play the numerous games available on your smartphone or you tablet? Once you get hooked to a few games you will suddenly find a new community of friends who are playing the same games as you. 
 
Slow Down 
 
“There is more to life than increasing your speed” said Mahatma Gandhi. 
 
Slow down your breathing so that you’re aware of each inhalation and exhalation. Slowing down is also a state of your mind. If you keep fighting your own self every day, guilty that you are doing less, you will be a very unhappy person. On the other hand, if you internalise the fact that you are moving into a new phase of life and that slowing down is a part of your new paradigm, the transition will not be so painful and hard to accept. 
 
Slow down your speech, your inner thoughts, and the frantic pace of everything you have done over the years. Take more time to hear others. Notice your inclination to interrupt and get the conversation over with, and then choose to listen instead. You will start to hear many things that you missed earlier in your conversations. You will start to see your relationships with your family and your friends in a new light. Stop to enjoy the stars on a clear night and the cloud formations on a crisp day. Sit down in a mall and just observe how everyone seems in a hurry to get nowhere. 
 
Be Conscious of your Health 
 
A healthy body is what you owe to yourself as you start your journey for the remaining one third of your life. Most of us have abused our bodies through our working lives and our bodies have responded admirably to all the stress and strain we have put it through. In addition, we are also probably a little overweight and we have blamed this on incessant travelling and poor eating at odd hours. 
 
Now is the time to make the change for your body, your temple. If you are not physically fit then imagine the trouble you are planning to give to yourself in the next phase of your journey we call life. 
 
Start counting calories and start an exercise regime. 
 
Be free of debt 
 
Remember that you’re attempting to simplify your life here, so you don’t need to purchase more of what will complicate and clutter your life. 
 
If you can’t afford it, let it go until you can. You don’t need to buy something on your card and then have to face the stress of paying your credit card bill. You are far better off to have less and enjoy the days of your life than to take on debt and invite stress and anxiety where peace and tranquility could have prevailed. 
 
Take every day as it comes 
 
Every day is a new beginning and we must be thankful for what we have. 
 
There’s nothing more awe inspiring than nature itself. The fantasy to return to a less tumultuous life almost always involves the thoughts of living in the splendour of the mountains, the forests or on an island; near the ocean or beside a lake. These are universal urges, since nature is created by the same Source as we are 
 
Look at so many of your friends who did not make it as far as you have either professionally or personally or have failing health and be thankful for what you have. 
 
The new retirement is about personal growth. It's a chance to mend fences, heal old wounds, and really get to know yourself. Since you have more time, take up writing a journal. Indulge in the luxury of going deep and understanding your life, your relationships, and your lifetime motivations. 
 
Your time must finally belong to only to you. 
 
(Image: Thinkstock)

12 ways how you should plan your retirement

A lot of wealthy workers could be missing a vital flaw in their plans for <keyword id="25452" type="UNKNOWN" weightage="60" keywordseo="retirement">retirement</keyword>, a new survey shows. 
More than 80 percent of workers earning $115,000 say they are prepared for retirement –– but they think they'll only need $66,000 per year to live on, <keyword id="149621" type="COMPANY" weightage="60" keywordseo="Charles-Schwab">Charles Schwab</keyword> found.
Sure, it's possible to survive on $66,000 a year –– plenty of people would be glad to earn half that much in a year –– but chances are high-earners won't be prepared for that kind of lifestyle change, let alone unexpected costs that could come up down the road.
Most experts agree consumers should plan on at least saving enough of a nest egg to maintain their current lifestyle in retirement. Otherwise, the only answer is to find ways to minimize costs and trim household budgets. 
That starts with figuring out what age you plan to retire, and these days, workers are <keyword id="37481" type="ORGANIZATION" weightage="60" keywordseo="planning">planning</keyword> on working well past the typical 65th-birthday benchmark. 
Couple that with the fact that we're living longer than ever as well, and retirees could wind up spending 15 to 20 years living off just their nest egg alone.
The biggest hurdle retirees will almost certainly face is the rising cost of health care. 
"Even with Medicare benefits, a 65-year-old couple could need nearly $400,000 to cover out-of-pocket health care costs during retirement, according to research by the Employee Benefit Research Institute," noted <a href="http://aboutschwab.com/press/experts/carrie_schwab-pomerantz" target="_blank">Carrie Schwab-Pomerantz</a>, Charles Schwab &amp; Co., Inc. senior vice president. "The bottom line for everyone is that health care costs need to be carefully factored into retirement plans." 
No one can predict whether they'll need long-term medical care in the future, but there are steps people should take now to mitigate those issues as early as possible.
First, review your retirement goals with your spouse or partner and think about running it over with a financial advisor. Fee-only financial planners have a fiduciary duty to work in the best interest of clients, and you won't have to worry about commissions or other hidden fees that could sneak up on you.
Just <a href="http://americasavesweek.org/images/aswgraphic.jpg" target="_blank">half of Americans</a> said they're saving through a retirement plan like a 401(k) or IRA, according to a recent survey by the EBRI. While not everyone might be able to max out a retirement plan contribution each year, even contributing a small portion of each paycheck to a retirement account could be a big difference in the long run. 
 “Especially for those looking to catch up on savings, we recommend maximizing contributions in a 401(k) at least up to the employer match, considering other tax-advantaged retirement accounts such as an IRA, and finding ways to automate savings,” Schwab-Pomerantz says.

Wealthy Workers Are Seriously Underestimating Their Retirement Goals

<ul><li>Saurav Ganguly ended the uncertainty by ruling out <keyword id="6397" type="PERSON" weightage="20" keywordseo="Dhoni">Dhoni</keyword>’s retirement. </li><li>Dhoni hasn’t appeared in any match for over six months i.e ever since India lost to New Zealand in the World Cup semi-final. </li><li>Rumours of his retirement gained ground after the BCCI dropped his name from the list of annual contracts. </li></ul>“Dhoni finishes off in style,” the commentator Ravi Shastri yelled when the then Indian cricket captain hit the winning six that got India the ICC Cricket World Cup in 2011, an iconic moment etched in the memories of Indian cricket fans forever. However, as it seemed earlier in the day, Mahendra Singh Dhoni’s exit from international cricket could have been far less flamboyant. The 38-year old cricketer from Ranchi was dropped from the BCCI's list of annual contracts, which many saw as the end of Dhoni’s career. But Dhoni may not be retiring. The contract drop might be a strategic shift in his career. Currently, Dhoni is with the Jharkhand Ranji Trophy squad in Ranchi. Dhoni hasn’t appeared in any match for over six months, ever since India lost to New Zealand in the semi-final of the World Cup 2019. Amidst rumours of his retirement, team India’s head coach Ravi Shastri recently gave Dhoni fans a ray of hope when he said Dhoni may be able to play World T20 this year if he performs well in the upcoming Indian Premier League (IPL). Without a BCCI contract, Dhoni may be picked as a freelancer— someone who is paid for a match or a series— but he will not be the permanent fixture his fans would want him to be. 
	
	
	
	<div type="Slideshow" msid="73301923" hostid="261" title="Dhoni is not retiring ⁠— these are some of the pictures from the highest points of an illustrious career" firstImageMsid="73302219" slideCount="6"></div>

You Searched For "how to start retirement planning" and got 12 results

How to save Money for Retirement

BI India Bureau

8 Steps to plan your investments for retirement

Big Decisions

3 tips for saving more for retirement in 2017

Arielle O'Shea, NerdWallet

457 plans: The retirement option for nonprofit and government workers

Aly J. Yale

The difference between a Roth 401(k) and a traditional 401(k), and how to decide which retirement plan is right for you

Clint Proctor

Majority of Indians over 45 years of age want to retire in next 5 years over health and work pressure

BI India Bureau

3 steps to start building your own retirement plan

Alexander Webb

I'm a financial planner, and I do 3 things with every client to make sure they can retire exactly when and how they want

Martin A. Scott

Want To Plan Your Life? Stop Telling Yourself These Money Lies

Rajiv Raj

12 ways how you should plan your retirement

Ashutosh Garg

Wealthy Workers Are Seriously Underestimating Their Retirement Goals

Mandi Woodruff

Dhoni may not be retiring ⁠— these are some of the pictures from the highest points of an illustrious career

Preeti Soni

Popular Keywords

Buying Guides