A person with knowledge of finance and investment avenues can create his/her retirement plan. The most important aspect of a retirement plan is the time of planning. The earlier one begins working towards such a plan, the longer that individual has to make the plan work.
A retirement plan will depend on various factors such as:
- One’s city of residence
- Family’s size
- Number of dependents
- Sources of income
- Debt to be repaid
Some cities are more expensive than others so this will take a toll on your finances if you decide to reside in a particular city
Having multiple sources of income will help you save aggressively and hence, invest aggressively. Though multiple sources of income will allow you to set aggressive saving and investing targets, your number of dependents and how expensive your lifestyle is will set realistic expenses.
Your time of creating/working on your retirement plan, along with your risk appetite, will dictate which instruments you invest in.
If you have:
- Decent cash surplus and a good time horizon, you can be conservative while investing and still reach your retirement target
- Not a good liquidity situation and short time horizon, you will have to invest aggressively with a decent amount of risk to reach your retirement planning goal.