Retirement planning is one of the biggest financial decisions one makes in life. It has a set of challenges and if you don't get your finances right with smart planning and consistency, you are unlikely to achieve your retirement goal. When planning for retirement, one has a number of questions including: Where to put money? How much and for how long?
Who better to answer these questions than those who are experienced?
In a series on retirement planning, MintGenie interviews a retired senior citizen every week to explore how they planned their retirement, the investments that worked for them, the ones that did not, the advice they have for the younger generations and much more.
This week, we've interviewed NT Jose, Retired Lt Colonel, to know how he planned his retirement and learn some lessons. According to him, SIP in a mutual fund is the best plan for long-term financial goal. “Invest in mutual funds through SIP, best suited for salaried class,” he advises GenZs.
Edited Excerpts:
How did you plan your retirement and did you follow that plan?
Right from joining service, we had compulsory contributions for provident fund. As the PF was tax free, I contributed maximum and enhanced the same whenever there was a salary hike.
I have availed a home loan from Army Welfare Housing Scheme and purchased a flat and given it on rent. Almost 60% of the EMI - I met through monthly rent. Before my retirement, full loan amount was paid and the flat is fully owned by me and still on rent.
What were the investments you made?
Gold, mutual fund, PF, RD, etc.
In your view, what works best for retirement and what doesn't?
One should save money in any form right from Day 1. SIP in a mutual fund is the best plan for long-term financial goal. One can avail a home loan and pay back in EMI. It gives tax exemption also. Always think ahead about the inflation – 20 or 30 years down the line when you retire – and plan accordingly while making investment.
LIC is not an investment. It gives a security cover for the next of kin after the demise of the insured person.
FD gives meager interest and it is taxable also. After considering inflation and tax on interest, gross interest is 2 to 3% only, hence, not recommended.
According to you, what are the most important factors to consider when planning retirement?
Your liability, current salary and status of your job, job security, your current assets are some of the factors you should keep in mind when planning retirement.
Any advice for GenZ for early retirement?
Start saving early. Restrict use of credit cards. Invest in mutual funds through SIP, best suited for salaried class. Never withdraw in part until 10 to 15 years.
