Retirement account

Yesterday, I was in a bookstore and was reading some financial book and i found a flaw in my financial planning. The book was talking about in one of its chapters to ensure that there is a separate account created for retirement planning. Even the latest edition on "Money today" was fully based on retirement planning.

I thought to myself that i had a good plan, but everything seemed to be in one bucket. The magazine asked a lot of people if they had ever dipped into their retirement savings-- THAT got me thinking. I mean how can i answer that question if i havent earmarked what is my retirement savings! Sure, i know that PF and PPF is for retirement, but that is not going to be enough, so some of my other savings are definately needed for my retirement.

So , the moral of the story is define your retirement account very very clearly. Clearly identify which investments and the money coming from those investments are towards your retirement. I plan to get this closed out over the next few weeks ( hey, it would take some time to identify these accounts and how i will manage the money!)

But here are some initial thoughts,

1. Have a separate bank account towards the retirement plans. This i guess adds to the no of savings account one should have ( read my previous post on optimize your SB accounts)

2. Move some of your investments clearly onto this account so that when you take out money from your MFs, FDs, it comes directly into your retirement account.

3. Evaluate your retirement portfolio. Decide your equity- debt ratio, which funds in equity, sectoral or diversified.

This is important, especially when you start getting older.

This will help in a long way to decide "When you WANT to retire, not When SHOULD retire" 

Happy Investing!

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