image title

How You Can Plan for Your Retirement in Your 40s?

Sumit Asrani Sumit Asrani 15 January 2018

Finding the best way to plan your retirement in your 40s can be difficult. But do not be disheartened, it's never too late to take the first step. Read on to know how.

Pension Plans

If you are wondering:

“Is it too late to start your retirement planning in the 40s?” Worry not. Here’s a simple guide to help you in your retirement planning. To help you plan your retirement

Learn How to Plan Your Retirement

How Much Money Would You Require?

To retire means to be financially free. Being financially independent and live your lifestyle as you wish to live.

That brings us to the quintessential question, “how much money would you need post-retirement?”

You need to see your current lifestyle, monthly expenses, and other expenses. You need to analyze how much money you would likely require after considering inflation.

What else? You may also consider if you want to leave some legacy for your grandchildren or perhaps, just gift them every once in a while.

How Much Money Can You Invest Now?

Knowing how much money you may need after you retire is one aspect. The other one is to know how much investment that would require over the period.

Furthermore, you also need to see how much you can invest now. Because it shouldn’t hinder your cash flow. For which, you can also keep track of your savings and disposal amount of money. Another thing to keep in mind is, would you like to invest through a single pay or regular investment – monthly or annually and so on.

Once, you have figured out your investment capability, then you can narrow it down as per your financial goals and ways to reach those goals.

For instance, you are 40 years old (not saved any money for your retirement), and if you plan to retire at the age of 65 years, and wish to get a corpus of Rs.1 Crore (considering 5% inflation) in your post-retirement. For which, you may be required to invest Rs.1.2 lakh per year.

Now, you need to analyze if you are in a position to save and invest annually.

Know What Are the Possible Ways to Retire Happily

Now that you have figured how much money you would need and how much you can invest, it is time to find the right financial tools to meet your goals.

What Are the Financial Vehicles to Meet Your Retirement Goals?

There are plenty of options available, but planning your retirement with life insurance can be a good option. Life insurance not only provides long-term retirement planning, but also provides life cover. That means, your family stays financially covered in case of unfortunate eventualities.

You can opt for a retirement plan or even a whole life plan.

People opt specifically for retirement plans as they are meant for retirement planning only.

Planning your retirement with retirement plan is safe, secure, and easy. You are assured of guaranteed sum assured from the day of policy inception.

Reasons to Plan Your Retirement With Retirement Plans

  • It offers a life cover
  • It provides the facility to accumulate wealth
  • You can add Riders, which will enhance the scope of the base plan

You can check different retirement plans offered by the top insurers. See what works for you.

A good way: If and only if you have a high risk appetite, you can invest in a pure insurance plan – a term plan. Since it cost very low as compared to the other life insurance products, the remaining money you can invest in different corpus building options like equities, mutual funds, etc. There are investment opportunities that give high returns in short and long run. Even in your forties, you still have considerable time to invest in diversified investment vehicles. You can still make a sound portfolio of mutual funds. But, don’t forget to keep track of your investment.

Tips for Retirement Planning in Your 40s

Tip 1: Cut down your unnecessary expenses

Be it your credit card billing or personal, car or home loan, if possible cut down on all those expenditures. Cut down on the unwanted billing cycle. You can start SIP with your saved money from cutting down the unnecessary expenses.

Tip 2: Start planning now

It is okay if you didn’t plan way ahead. No point in regretting. Instead, take necessary steps and start now. With whatever the minimum amount you can invest with.

Tip 3: Withdrawal limit

Do not withdraw more than what is required in your retirement stage. The tendency to withdraw more than required may backfire you.

Start Your Retirement Planning in Your 40s Without Any Delay

Yes, you could have planned in a better way if started earlier in your life. But it is not a good idea to delay it any further than now. If you do not find a retirement plan a good option, or if you have a good amount of disposable money and have a high-risk appetite, you may like to invest in mutual funds for high returns, while opting for a life cover with the help of a term plan. There’s no ideal plan or ideal way to plan your retirement, however, the best way is to start now.

Recommended Read: How to Use Life Insurance for Retirement Planning?

Sumit Asrani
Written by Sumit Asrani
He's a writer. His blood cells are woven with Hypergraphia, as he breathes in books, he exhales words and sneezes poetry. Captivated by the web-of-words he's trying to escape miraculously as a content writer at