Retirement Planning

As we are about to hit 50, all kinds of anxieties start hovering over us. Like funding for children’s higher studies, savings for their marriage; planning for retirement and saving up a corpus to meet medical expenses, more so if your parents are living with you. Sort out travel expenses, hobbies and social life. You should consider a certain corpus fund which should be invested in proper portfolio and which should be able to provide inflation-adjusted income year after year.

With life expectancy going up, there is a need to plan better about things that are in our control particularly our health, happiness and investments. No one knows how much savings will actually suffice and hence people often remain confused about investment plans. Assess current and future expenses based on your current lifestyle.

It is not easy to save and invest when one has too many responsibilities. But at the same time, saving up is necessary keeping in view life after retirement. Health insurance or medical needs should be covered.

In case of investments, it is not the time to take blind risks or speculate but be in a safe zone where the investor gets to know about the maximum possible damage a little early and the cost of coming out is not very high.

In case of real estate, it is recommended to sensitise the children about nomination process. In case of a new purchase, ideally it should be in a gated community which is easily accessible and has some amount of facilities with seniors in mind.

Nominations, bank accounts, legal documentation, etc will need to be revisited in such a manner that in one’s absence, it is easily understood who gets what, without too much of legal entanglements.

It is also time to do something you wanted to but could not, like taking a holiday in a cruise or buying something expensive for your spouse or self.

More financial independence is required. That means less EMI, borrowed lifestyle and more of having access to easy liquidity. Aim to repay loans before retirement. No loans should be carried forward post retirement. The most expensive loan should be repaid first in the order of priority. If necessary, curtail regular expenses and repay all the loans.

There is a need to work out retirement requirements in detail. Breaking the needs as basic needs, additional requirements and lifestyle requirements. One should start preparing a corpus, which can at least take care of their basic needs before anything else.

Inflation is the biggest value driver in calculating retirement corpus. Do not expect expenses to go down drastically from what you used to spend during your active work life. Work with a competent financial advisor who can incorporate inflation into your planning.

Before stepping into retirement, consolidate the existing corpus, review asset allocation and shift to a conservative investment approach. Plan for outlays required for the next 10 years without dipping into the corpus. Upon retirement, invest the a portion of the consolidated corpus into a liquid debt instrument and buy an annuity with the balance portion of the corpus.