Tips to Boost your Savings for Retirement
After retirement, you will need to finance your living expenses without the support of a monthly salary. So, you must plan ahead and boost your retirement savings in small yet significant ways. Start off by calculating the amount of money that you will need once you retire. Factor in things like anticipated inflation and expenses. Once you have a figure to work towards, saving becomes easier.
Take a look at 5 things that you can do to boost your savings post retirement:
1. Set up automated contributions to a savings account
Using a savings account is the best way to kick-start saving for retirement. You can set up a recurring deposit, where, each month, a fixed sum of your income is transferred to another savings account. As your income increases, you can increase this amount. By depositing funds in a recurring deposit account, you allow them to mature over time and collect interest.
2. Select appropriate investments plans to generate monthly retirement income
Once you have enough money in your savings account following the step above, it is time to make the right investments for your retirement. The focus of your retirement plan should be investing in the right channels, so you can replace your salary with a monthly payout.
For example, you can choose a fixed deposit in a tenor of your choice, or invest in Public Provident Fund (PPF) that matures at 15 years, making it ideal for retirement planning. Since it is a government offering, it gives you complete security as well. The same can be said for fixed deposits that allow you to invest as much or as little as you want. Choose a tenor of your choice and pick a non-cumulative fixed deposit to enjoy monthly payouts.
You can invest in a PPF while you’re working, and re-invest the matured amount into a fixed deposit too. Another government-backed scheme that offers monthly payouts is the Post Office Monthly Income Scheme. Apart from this, you can invest in is the Senior Citizen Saving Scheme (SCSS). While fixed deposits offer up to 8.15% interest, PPF offers 7.8% and SCSS offers 8.3% as interest.
3. Create a secondary cash reserve for excess income
Apart from monthly contributions and investments, create a cash reserve that you can direct your surplus income (like a bonus) towards. Once you retire, you may need money for an urgent medical procedure or travel need. In such times, you can rely on your cash reserve. This will give you instant access to liquid funds, so that you can meet all emergency expenses without any strain.
4. Review your expenses and find ways to curb them
Your monthly spending figures are likely to increase as your salary increases. To boost your retirement savings, try not to overpay for lifestyle expenses. You can do this by checking online for the best deals on groceries, electronics, clothes and other items. Rather than being brand conscious, be concerned about quality and buy things that will last. This way, you will save more money for your retirement fund.
5. Make high-yielding investments
While stable options are a must in your investment portfolio, balance them out with other high-yielding investment options like mutual funds, equity and annuities. This will give you a chance to create a balanced portfolio and benefit from both high-risk, as well as low-risk investment options. Investing in mutual funds, through SIPs, for example, is a great way to strengthen your portfolio. You can also divert funds from your retirement savings account and use the money to invest in these options.
These tips will help you boost your retirement savings to create a corpus of funds that can help you live a fulfilling life after you retire. Creating a plan for your PPF investment and the money in your EPF is also important. The best way to use these funds is to invest it in a scheme that offers periodic income such as non-cumulative FDs. Invest in the (FD) Fixed Deposit, which gives you a high rate of interest, flexible tenor, safety through its credibility rating, and ease of operation with online account management.