Best ways to save for the retirement on minimal income
Retirement saving is not a big question when the income level is very high. However, dealing with retirement savings for the one with minimal income requires a right amount of analysis. The present article tries to come up with some of the best ways to save for retirement on a minimal income.
There is no thumb rule through which the individual can figure out the saving amount, which would be sufficient for their retirement. Further, even if there is no thumb rule to decide the age from which one should start the retirement savings. However, in order to get a reliable answer to both, the following points should be kept in mind –
- Try to save as much as possible for retirement.
- Retirement savings should be started as early as possible.
- Work on the principal of savings, investing and reinvesting.
Factors to be considered while planning for retirement
When you are deciding for savings for retirement, it is important to keep the following points in mind –
- Start your retirement savings as soon as possible.
- Keep aside a specific percentage of income for retirement corpus.
- Always consider the inflation factor while choosing a retirement plan.
- Increase the amount of investment with the increase in income.
Best ways to save for the retirement for the lower income group
Briefing hereunder some of the options which can help the lower income group to invest in the best possible ways for their retirement –
- Investment in Fixed deposits – Savings via fixed deposits is one of the safest route. Even though with the continuous falling interest rate, resulting in less return, the fixed deposits savings is still considered to be the most preferred retirement savings. Fixed deposits savings is a must since there is no lock-in period criteria followed. Such savings can easily be helpful in case of an emergency.
- Contribution to the Employees Provident Fund (EPF) – For the salaried employees, receiving employer contributions to employee’s provident fund, is one type of mandatory retirement savings. One should observe that, basically, there is nil withdrawal or minimum withdrawal from the EPF account. If such employee has either withdraw any amount nor taken any loan against the accumulated balance, the amount contributed in the employees provident fund acts like solid base towards retirement savings. To some extent, such employee is not much required to be worried about its retirement savings.
- Investment in Mutual Funds – When one is thinking about retirement savings, one should also consider the inflation part as well. In order to cover up the inflation, one should invest in equity. However, when you don’t acquire much knowledge about the market, investment in mutual funds is the best option. Systematic Investment Plan (SIP) system allows the investor to invest on a regular basis. The lower income group would be happy to note that, one can start investing in SIP with minimum amount as low as INR 100.
- Other options – than the above listed options, one can also go for tax-free government bonds, investing in equity / debt, post office monthly saving scheme, investing in pension plan etc.
You may also check ways to save tax here
Disclaimer: This is a guest article by Abhishek Jain from Taxguru. All the facts and opinions expressed are of the author and finkwik takes no responsibility for any inaccuracy.