Retirement planning: Are you saving enough money? Tips on SIP, EPF, and NPS contributions | Mint

Retirement planning is essential for ensuring financial security in the future. Adopting a proactive, planned investment approach can significantly aid in developing a solid corpus. Industry experts suggest that a person can create a diversified, growth-oriented strategy by combining instruments like systematic investment plans (SIPs) with government-backed programs like the Employees’ Provident Fund (EPF) and the National Pension Scheme (NPS).

Systematic investment plans (SIPs)

“In today’s world, it is very important to adopt an active style of retirement planning through systematic investment plans (SIPs) along with government-sponsored schemes. In my opinion, it would be best to readjust your SIP distributions in four cycles, expecting annual changes that will exceed 10%, raising their value against inflation,” said Gaurav Singh Parmar, Associate Director, Fincorpit Consulting.

EPF

You must accumulate a considerable corpus in your EPF (Employees Provident Fund) account. “As it gives a decent 8.15% return, make sure to contribute more than the basic 12% into your EPF,” says Gaurav Singh.

NPS

“If you are below 45, consider using the aggressive lifecycle fund for NPS, which has a 75:25 equity and debt mix. NPS’s auto rebalancing feature, in this case, helps in risk management in relation to the policyholder’s age. Keep in mind that a periodic increase in your contributions in nominal terms will greatly influence your net worth,” said Gaurav Singh Parmar.

Real estate

Year-end is crucial to evaluate how your real estate portfolio contributes to your retirement planning.

“It is a well-known fact that 60% of the retirement corpus should be in real estate, but the strategy needs to be flexible. Concentrate on a balance of residential and commercial properties – ensure at least one commercial asset earning an 8-9% annual rent return. Use REITs for easy access and fractional ownership for grade-A commercial properties. Reviewing the appreciation, rental yield regularly, and cost of maintenance of the properties is important. For those in their 40s, for example, investing around 40% of the fresh investments in real estate would be prudent,” suggested Aman Gupta.

It’s critical to regularly review and make smart adjustments, particularly at year-end, to ensure your retirement fund is on track. By evaluating and maximizing your SIP, EPF, and NPS contributions, you can protect your financial future from inflation and market swings. To maximize your returns over time, remember that consistency is the key to a comfortable retirement.

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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.