Retirement might be often overwhelming. Everything changes on retirement, starting from your work-life balance to your finances. So, if you do not plan early, your post-retirement life can be a big mess instead of being peaceful. Here are a few steps that you may follow.
- To know your age of retirement.
It is generally 60 years of age but might differ from profession to profession, or from one organization to another. In that case, there are a few things that you need to consider here.
- At this age, your regular income will stop. So, do you want to bank on savings or engage in some other enterprise?
- How long can you expect to live after retirement? This definitely asks for an introspective look into your medical history.
- What is the situation of your family? Are there any other earning members or are they all financially dependent on you? If you have children, how long do you need to pay for them?
- For how long you can work after proper retirement?
This also considers your current age. If you are now thirty your retirement planning will be widely different from someone who is fifty.
- Determining post-retirement expenses.
You must make a retirement portfolio where you consider spaces to curtail your expenses. In some way or the other, you will be dependent on your savings. Additionally, there will be inflation.
Moreover, you should also keep some savings aside for any emergency. Your income will reduce to at least 30% of your current income. So, save from now and reduce your post-retirement expenses to at least 70% of what you do now.
But that might be difficult if you want to fund your children’s education post-retirement or have a loan to pay off. So, the idea is to save from the beginning, annually update your plan and not splurge right after retirement.
- Start Investing Now
The most important component of retirement is inflation which diminishes the value of money over time. The best way to battle it is to invest in stocks, land, and other precious items. You should fix a certain portion of your income towards your post-retirement plan. The investment depends on 2 factors:
- How long do you want the money to be at stake
- How much risk you are willing to take.
Invest more when you are young. That way even if you suffer from a huge loss, you will have the time and opportunities to fight it. But, at the ripe age, if you lose all your life savings, it might become unbearably difficult.
- Buy health insurance or other plans
This is the best way to resolve a sudden health crisis or emergency post-retirement. Having good-term insurance goes a long way. If you pass away during the term, your family members who are dependent on you will be financially compensated by the death benefit. Moreover, your terminal and critical illnesses, accidents, etc will also be covered with the help of riders. To minimize risks, start early. Several insurance companies, like HDFC, even provide special retirement plans. Check out and find what suits you the best!
The crux is to start planning, investing, and buying insurance at the right time, as early as possible. With a properly sorted out plan, your post-retirement life can be pleasurable, peaceful, and enjoyable without the constant thought of money.
