How to Overcome These Challenges When Building a Retirement Corpus?

Last Updated : Feb. 17, 2022, 3:37 p.m.

Start building a retirement corpus the moment you start earning. An early beginning helps you accumulate enough wealth to retire comfortably. Late starters would need to invest more by constantly rejigging their budget. For instance, someone investing INR 10,000 monthly in equities from the age of 30 years would accumulate INR 3.5 crore (approx.) by the time he retires at 60. In comparison, an individual aged 45 would accumulate only INR 50 lakh at retirement by investing the same amount. To generate INR 3.5 crore, the concerned individual will need to invest more than INR 60,000 monthly, making it all the more difficult for him to ensure amid rising inflation.

While an early start gives you a strong push, challenges could still come in your way – such as sudden stoppage of income, increase in expenses, a sudden health emergency, etc. These may be common concerns but could lead to uncommon problems if not addressed.

Let’s Address These Possible Challenges While Building a Retirement Corpus

The challenges mentioned above can not only disturb the investment pattern but also make you wonder whether you should keep investing. Besides investing, you’ll need to meet some other important needs too, such as education fees for your kids, rental costs, and several day-to-day expenses. But applying a few hacks can help you overcome challenges. Let’s check the solutions for the challenges that you may face while building your retirement corpus.

How to Deal with the Sudden Stoppage of Income?

Your income may come to a halt with the loss of your job. You can lose a job due to various reasons. Either your performance may not meet the expectations or your employer may be forced to oust you on account of business losses that it might face. But you cannot lose sight of your retirement goals.

You may start with a certain investment amount that you would find enough to accumulate the coveted sum at retirement. But be a couple of steps ahead to counter these challenges. Hike the investment amount from the start itself. For example, a monthly investment of INR 10,000 was enough to help you achieve the required retirement corpus. Hike it to INR 15,000 if your income allows you to. This will help cover the shortfall that you may witness with the stoppage of income. One more thing – you could put a pause to your investments for the time you’re out of work. Yes, if you invest through a Systematic Investment Plan (SIP), you can stop your investments for a period ranging from 1-6 months. Hope you get a new job during this period and continue to invest as before.

What If the Expenses Rise Suddenly?

Expenses can exceed your estimates and make it tough for you to continue investing. Should you face the same, figure out the expenses that you can or can’t avoid. Often people fail to differentiate between the two and could not invest properly. There may be some avoidable expenses that you can keep out of your routine.

How to Continue Investments Amid a Medical Emergency?

Like the previous two situations, even a medical emergency can strike you and disturb your retirement planning, if not prepared for the same. A lot of us are still not insured for such situations with a health insurance plan. As a result, they end up consuming their savings accumulated through investments. Sometimes a health emergency costs you in lakhs, thereby putting you way behind in the absence of health insurance. This insurance ensures you and your family members are covered financially against a medical emergency. Compare the health insurance plans available and choose the one that covers you against a wide range of diseases for the least premium. While choosing, keep an eye on the coverage amount too that the insurer will disburse in such a case. Of course, that needs to be high to meet the healthcare inflation.

Conclusion

We have addressed some of the challenges you may witness while building a retirement corpus for yourself. While solutions discussed above are viable, the right type of investment plan is also required to stay ahead of the curve. Equity investments are the best ways to achieve retirement corpus. So, allocate the maximum to these investments. You can invest in equities directly or by mutual funds or unit-linked insurance plans (ULIPs). If you know the market dynamics, investing directly would make sense. Else you can choose to invest in either MFs or ULIPs where fund managers manage your investments.