When would be the right time to retire? This thought would have crossed our minds several times. Two or three decades back, if you posed this question to someone, the answer would have been an easy and obvious one- finish education, join an organization, have a stable career with hardly any job changes during the working years, and retire at the stipulated 58 or 60 years of age with all accumulated terminal benefits- PF, gratuity and pension and lead a simple retired life with this corpus. But today, given the job uncertainty and frequent job switches, increased cost of living and lifestyle problems and stress, when to retire has become a difficult decision to make.
If you are in your 20s or 30s and try to use some of the “calculate how much you need on retirement” tools available online, the result is an unbelievably large sum; with the effect of inflation and time factored in. And any financial planner would tell you that the only way to save this kind of money would be to save wisely and regularly, take calculated risks and invest in a proportion of equity and debt according to your age, profile, line of business etc.
The voluntary provident fund or VPF is one of the best options which should form the fixed income / low risk category of your retirement planning portfolio.
A couple of days back, one of the leading financial newspapers had a detailed article on the captioned subject including the method to calculate your required retirement corpus. One of my very close friends did so and was shocked to find that for her the amount worked out to be close to Rs 6 crores; far more than what she had expected. With this revelation comes the next worry – of finding some way to save this amount.
Let us understand this in detail.