Retirement is an inevitable part of everyone’s’ life. You may have planned your finances well all through your working life, but all that may render futile if you do not have a robust retirement plan. Post-retirement, as your income reduces, it is paramount that you are financially prepared to meet essential expenses like medical emergency while maintaining your current lifestyle.
In India, most people tend to avoid thinking about the retirement planning until they near the retirement age. But, it is as important stat for which you much we well-prepared. Having enough savings to support your needs is the first and foremost step to be prepared for life after retirement.
Generally, people depend on pension money to take care of their expenses after retirement. But is the pension money enough to support the expenses? Most people fail to consider the inflation factor? What if there is no pension? You need to plan ahead of time in such cases, which is where retirement planning comes into the picture. Here are five effective steps for retirement planning:
Set retirement goals
Like any other planning, it is important to set goals for retirement as well. These goals can be long, medium or short term. Defining your goals will immensely help you in narrowing down the investment options. If you still have 20-25 years before you retire, you can invest a substantial amount in equity funds, which are known to provide handsome returns in the long run. If you have short-term needs, you can invest in debt funds, SIPs, or ELSS, which assures good returns with minimal risks.
Access your existing financial situation
Once you set the goals, the next step is to access your current financial status. To plan better you must take in account both your income and expenses to strike a balance. While you do this, the next step is to estimate the expenses you will require to take care of after retirement. Then lastly tabulate assets like property, stocks, savings, etc.
Cut-off unnecessary expenses
Compare your expenses with retirement assets and weigh if the latter is falling short. Get rid of expenses that are unnecessary. If there are any unpaid debts try paying-off them before retirement. Another way to eliminate debt is, if there are any credit cards that you do not need anymore, you can discontinue them by informing it to your bank. Cut-off expenses like extra telephone line, magazine subscriptions that you don’t read, memberships you don’t follow. You can also find alternatives for a few expenses where you can’t cut-off. For example, if your existing residence is costing you more for maintenance and rent, you can shift to a house that will reduce these expenses.
Look for an alternative source of income
Retirement doesn’t mean you are no longer eligible to work. You can still opt for working from home or provide or continue working part-time for the company you have been serving. Try to increase or atleast maintain the existing cashflow.
Invest in good term insurance plans
The post-retirement period is the time that you spend after serving at a job for a long tenure and so it is supposed to be the golden period of your life. Investing in a good insurance plan can help you meet your monthly expenses as well as take care of the hefty medical expenses in case of emergency.
In-time retirement planning can be very beneficiary as it can help you take care of day-to-day expenses and spend your leisure time in peace.