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Here's a step-by-step guide for Millennials to retire rich

How can millennials get rich

You must start saving from now if you are looking to retire rich. Your financial goals must include a carefully chalked out retirement plan that may include investing in multiple fund instruments and investment options.

You are a working millennial who cannot wait to retire and live that rich and carefree life. However, retiring rich may not be so easy as it seems. A standard recommendation is that if you save at least 15 per cent of your earnings towards retirement, you will have saved enough to qualify as a retired, wealthy millennial. However, looking at the current lifestyle and rising inflation rate that has an aggravated effect on our expenses, retiring rich with such nominal savings may be far from the truth.

You cannot live rich to retire rich. This is the thumb rule that all millennials must live by. Not that you must live frugally to retire rich, but your retirement savings must indeed be higher than the recommended 15 per cent savings rule. The truth is, even if you want to live off funds equivalent to half of your final salary after retirement, you must save at least 40-50 per cent of what you are earning now and continue to increase the proportion of your savings till the last date of your working professional life. How much you need for retirement would depend on when you want to retire. While 65 years is considered an appropriate age for retirement, you must save more to meet future expenses in tune with your financial goals and rising inflation rate if you want to retire early.

While planning your retirement, do not ignore the quality of your current lifestyle, the possibility of sudden economic downturns, and the returns that people have earned from the market to date. We suggest the following measures if you are looking forward to retiring rich.

Pay yourself first :

When it comes to money, choose yourself as the priority as well. While you may consider paying off your rent, credit card debt, and other miscellaneous expenses to be the top priority, you may also want to consider setting aside some money from your income for your future. It can be in the form of savings or investments.

Generating additional income :

Irrespective of how much you earn now, remember it will never be enough for the future, considering the effect of inflation and lack of income post-retirement. When you have an additional source of income, you can ensure that you plan an added investment that will add to your financial security in the future. You may also freelance while working on a full-time job and divert the earnings towards some long-term investment option.

Additional Read: https://www.icicidirect.com/knowledge-center/article/10-golden-investment-rules-for-first-time-earners/19383

Know finHancial goals :

You may have a host of things that you would like to pay for or spend on. However, before indulging in unnecessary expenses, have a close look at your earnings and how you choose to invest the money. Make a mental note of the bank interest rates and compare them with returns you can earn from other investment options. List down and plan your strategy to achieve all your long-term investment goals like house ownership, child education or even retirement. Do not forget to have an emergency fund in place to take care of your sudden fund requirements.

Automate your savings :

Instead of letting your money sit idle in the bank, automate your investments so that the salary credited to your account is automatically directed to your savings and investment accounts. This will ensure optimum fund investment as you earn interest for every day that your money remained while also relieving you from the urge of unnecessarily spending your funds.

Plan your investments well :

Proper planning is a must if you wish to see your money grow. Divide your financial goals into imminent short-term goals, mid-life goals, and retirement goals. To meet your immediate needs, put a portion of your money in a bank savings account, while you can plan your mid-life goals by putting your money into an array of investment options, including stocks, debentures, mutual funds, and gold. To secure your retirement, you must put your money in a mix of investment options, including recurring deposit accounts, employee provident fund scheme, public provident fund, mutual funds, and pension plans. Many people negate the importance of a sound pension plan, not realizing how small investments made regularly amass into a lumpsum amount on which you earn interest as pension.

Additional Read: https://www.icicidirect.com/insurance-online/pension-plan/13024

Keep investing :

Many people rue that they do not have enough savings to invest. Make sure that you do not adopt this attitude towards investments. There is no way you can save more by simply earning more. You will achieve your desired financial goal only if you keep investing your money in diverse instruments depending on your risk affinity and the tenure for which you wish to stay invested. You may choose to park your money in mutual funds or fixed-income schemes or buy shares from the stock market. It would also help if you seek the advice of a personal finance manager for better financial management.

Additional Read: https://www.icicidirect.com/idirectcontent/ProductService/ProductService.aspx?MutualFunds/mutual-fund-target-investment-plan

Stick to your retirement plan :

It takes more than 30 years to accomplish your longest financial goal, i.e., retirement. However, many people fail to save enough funds for retirement as they tend to divert their earnings towards a sudden new goal. Remember that your retirement savings are the only source that you can fall back upon. So, it makes sense not to divert your regular savings to any other goal unless exceptionally necessary.

Buy health insurance :

Believe it or not, but medical bills can deviate you from living your retirement dream as sudden illness and subsequent hospitalization can cost you a major part of your savings. With an adequate health insurance cover in place, you will be relieved from paying hefty medical bills and treatment expenses from your pocket. Many health policies also pay for diagnostic tests, pre-hospitalization, and post-hospitalization care, thus, bearing a major chunk of the amount otherwise expended on health treatment.

Additional Read: https://www.icicidirect.com/insurance-online/health-insurance/13004

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