What images come to your mind when you think of your retirement years? Spending time with your children or grandchildren, lounging on the porch, enjoying hobbies such as music or gardening… the list goes on! People work hard so that they can accumulate enough money not just to run their current expenses but also to fund their post-retirement goals.
One of the most popular goals that people add to their retirement planning retinue is travel. Whether it is to the innermost corners of India or to the valleys of Europe and South America, travel is a form of adventure that many retirees seek after being freed from the 9 to 5 routine. Along with time, one requires another important resource to travel freely, and that is money.
When you do not have a regular source of income coming in every month anymore, how do you fulfil your travel goals? We provide some tips on how this can be achieved.
- Start your retirement planning early
Ask any expert as to when you should start your retirement planning when you haven’t already done so, and they will say, right away. The sooner you begin your retirement planning journey, the better. You have a longer time frame within which you can amass a huge sum of money. This sum of money can help you in various ways, such as running your household expenses, dealing with medical emergencies, and, of course, for your travel plans.
If you start investing in a retirement plan early, you also allow your money to receive the benefits of compounding for a longer period. So, not only is your principal amount gaining interest, but the accumulated interest is also gaining interest. You do not have to invest a huge sum right away; you can begin with small amounts and increase them gradually.
- Have an accurate estimate of how much you require
You should have a strong idea of how much you require during your retirement. Now, this may depend on your lifestyle, the age at which you plan to retire, your life expectancy, medical issues you may have, etc. A retirement calculator takes such factors into consideration to provide you with an algorithm-accurate figure.
Now, besides the essential expenses, you should also have an estimate of how much you require for your travel plans, specifically. Do you want to travel to a local destination or an international one? How often do you wish to travel in a year? What kind of travel would you like to pursue, luxury or budget? Based on the answers to these questions, you can come up with an approximate amount that you should aim towards.
- Choose the right products to invest in
Simply putting away money in a locker every month is not going to help you build the retirement corpus you want for your travels. You have to research and select products that meet your budget, risk appetite, and goals. The retirement calculator can provide you with a figure, but ultimately, you have to sort out how you will achieve that figure by the time you retire.
There are various retirement plans you can choose from. You can go for government-backed pension schemes that provide monthly pay-outs at appealing interest rates. You can also go for pension plans from private companies, such as a pension plan or an annuity plan, that provide monthly pay-outs. All you have to do is make investments in them before you retire.
If you have devised your travel plans only a few years before you retire and are worried as to how you will manage the funds, then fret not, there are solutions for that as well. You can opt for an immediate annuity retirement plan, in which you receive pay-outs immediately.
- Plan your taxes
Taxes should also be taken into consideration when creating your retirement plan. Otherwise, the income you are receiving from your investments and plans would be washed away in taxes. You can opt for pension schemes where the interest pay-outs are tax-free. For instance, one-third of the pension plan pay-out is tax-exempted. This helps you save a larger amount of money for your travel plans.
Tax benefits may change due to amendments in tax laws. Please reach out to a tax expert or a financial advisor before going ahead with any major decision.
