2 in 5 Indians are yet to start retirement planning said a report by Max Life Insurance Survey. Not just this, the survey also states that more than 90% of Indians in the 50+ age group regret not saving for retirement earlier. 

Unlike our grandparents who mostly had government jobs, we Millennials & Gen Z do not have the privilege of getting a pension post-retirement. It’s in our hands to safeguard our future by planning for it. 

When is the best time to start saving for retirement? If you’re someone in your mid-30s wondering about this question, the best time to start saving for retirement was a few years ago. But the second best time to start investing is now. 

So here are 10 tactics to boost retirement savings for your future

Starting Early

Starting at an earlier age will help you build a large retirement corpus easily. This is because you can take advantage of compounding. The most important variable in compounding is time. 

It’s like a snowball rolling and collecting more snow. With enough time, a small snowball will become bigger, and will also collect more snow with each rotation once it’s big. 

Same with your retirement corpus, this is because your returns will get added back, making the principal larger, and therefore earning greater returns. 

Also Read: Is it too late to invest in your 40s? 

Income – Savings = Expenses Method for Budgeting

Most of us try to cover our expenses first and later try to save any money left at the end of the month. But the issue with this method is that most likely you’re going to not have much left. 

Investments for retirement will require a good portion of your income, and saving whatever remains will not cut it. 

Hence, always subtract your savings from your income first. Make any SIPs necessary at the start of the month. Later use the remaining money for your expenses. One can consider the 50-30-20 rule for this. 

Increase investments, not lifestyle expenses

Lifestyle inflation can put a dent in your retirement savings. It refers to increasing your expenses with an increase in your income. For Ex: You earned a bonus, and chose to upgrade to an iPhone 15 Pro, although you had an iPhone 14 Pro. 

You most likely are going to have appraisals, yearly hikes, and bonuses. Instead of blowing it entirely, you must consider increasing your investments in a certain proportion. This will help you achieve a higher corpus over time. 

Try to step up your SIPs

This pointer is in connection to the previous one. Certain financial goals are difficult to achieve with your current financial situation. Retirement is definitely a long-term goal, but I’m sure people have other goals like higher education, buying a home, children’s education, etc. 

This is why using Step-Up SIPs will help you achieve your goals with more ease. Basically, you would have to increase your SIPs by a certain percentage each year. 

For Example, you currently have a SIP of  Rs 10,000. Next year, let’s assume you receive a hike of 10%, you should consider increasing your SIP to Rs 11,000.  

Curious about how much SIP you need for retirement? Use The 1% Club’s Step-Up SIP Calculator to find out for yourself. 

Focus on reducing and clearing debt

Debt has forced many people to suffer financially. This is why it’s important to clear off any debt as soon as possible. Especially those with high-interest rates such as Personal Loans, Credit Card Debt, etc. 

Make a list of your debts and allocate a good portion of your income to clear them off. Once they’re cleared you now have more income to save and invest. 

You can chart a plan to simultaneously clear debt and invest for retirement at the same time. The Debt Snowball Method or Debt Avalanche Method can be used to clear debt efficiently. 

Plan for Tax Efficiently

Not accounting for taxes can create a big dent in your retirement savings. There are multiple tax-saving avenues such as Section 80C, Section 80D, etc. 

Utilize these to save taxes. This saved amount can be better utilized for investing. It may seem small if compared to 1 year, but imagine the invested savings of multiple years. It will compound over time. 

Finally, for a goal like retirement, one must handle the taxation of gains effectively. Multiple Sections such as Sections 54, and 54F can help with this. Understanding the LTCG of different asset classes and how to reduce them is crucial to understand. 

Also Read: Section 80C: Use these tax-saving instruments to up your tax game for FY 2023-24!

Factor Health Insurance and Life Insurance into the equation

You aren’t immortal. And especially with our current sedentary lifestyle, younger generations are more prone to health disorders. A misfortunate event can wipe your entire life savings in the form of hospital bills. 

This is why it’s important to pick Health Insurance and get insured. Term insurance may also be required in case of any existing liabilities and if there are dependants. This is vital to protect your family financially in your absence. 

Not sure how to pick Health and Life Insurance? Join The 1% Club! We have dedicated modules that will teach you to pick the perfect insurance for your needs. 

Account for Inflation

Saving is not enough, I repeat, saving is not enough. Funds just lying in your bank account are useless and will get eaten up by inflation. You will need to invest your money in just a way that it earns returns good enough to beat inflation. 

Just beating inflation isn’t enough, it needs to earn returns beyond it to compound and make a difference. This can be easily achieved with a combination of equity and debt investments. You will require a higher exposure of equity and balance of debt to protect your portfolio. 

Monitoring and Rebalancing

It’s crucial to monitor and rebalance your portfolio every once in a while. I’m not suggesting constantly checking your broker apps 10 times a day. Time in the market matters more than timing the market. 

You can monitor your portfolio, once in a while to keep an eye on the performance of your funds. Rebalancing can be done once a year. By rebalancing, you avoid the risk of putting too many eggs in a single basket.

Rebalancing is making sure you’re diversifying in the right allocation. 

Also Read: What is FIRE – Financial Independence, Retiring Early?

4% Withdrawal Rule

This particular rule is related to the FIRE Movement. According to FIRE, one needs 25X their yearly expenses to retire today. Post-retirement, they’ll need to withdraw 4% of the corpus yearly to sustain themselves. 

Here’s an example: Let’s assume your yearly expenses are Rs 6 Lakhs. So your FIRE Number would be Rs 1.5 Cr (6L x 25). Now 4% of this Rs 1.5 Cr is actually just Rs 6 Lakhs. 

If invested to earn good returns, this amount will eventually last you 25-30 years through retirement.  

Disclaimer: This post is for educational purposes only and is not investment advice. In case you require retirement planning advice and suggestions, please contact an Investment Advisor registered with SEBI.