Retirement is inevitable. Our money earning capacity tends to decrease for various reasons as we age. It is only prudent to plan for something that is inevitable. Particularly, when we know that we will be retiring and do not know how long we will survive post-retirement, we need to be doubly careful. Financial planning for the inevitable happenings like retirement ensures that we lead a peaceful life post-retirement. A majority of us focus so much on our current life that we tend to miss out on financial planning for our retirement. A very little percentage of people do efficient investment management based on the retirement requirements. This is why it is very essential for all of us to aware about Retirement Planning in India. These will help you to not only save a lot of money for your golden Years also can help you save some part of the amount in the form of deductions. Let us have a look at 10 things we need to do before we retire.
1. Repay all your debts
Retirement is a stage where our income tends to be at the lowest and our expenses increase since it is highly dependent on many external factors. This being the case, repaying the debts post-retirement can cause huge stress. When you do your Retirement Planning pre-retirement, take into account debts like Housing Loan, Personal Loan, Vehicle Loan and other type of loans. Repay them off before you retire. This will offer tremendous financial freedom resulting in peace of mind which is the requirement at that stage of life.
2. Safeguard your funds saved towards emergencies
With the help of your financial advisor, ensure a certain amount is allocated towards unanticipated emergency expenses. Post-retirement is a stage that can take us by shock over many kinds of emergency expenses. Sometimes we may use funds specifically allocated towards emergencies for other interim purposes also. If your financial plan is exhaustive covering all crucial aspects of finance, you will not be made to depend on the emergency funds for other purposes. Even if you use the same for other purposes, ensure the same is refilled for the original purposes as soon as possible.
3. Plan specifically for your retired life
Post-retirement you may not require to invest in clothing and many others as frequently as you used to do while you were working. Instead, take professional financial advice to look for best investment options that will cater to your medical and travel needs post-retirement. This might get tricky for anyone who is new into investments as there is quite a number of investment options for senior citizens available. So, make sure to go through Experienced Investment Consultants in Delhi NCR .
4. Monitor your cash flow pattern
Your cash flow pattern pre-retirement and post-retirement has a huge difference. During the pre-retirement stage, your cash inflow, as well as outflow, will be high since you are earning. Look out for the possible cash inflow post-retirement. Plan to have a healthy cash inflow like rent, interest from deposits etc. Minimize the probable cash outflow post-retirement some of which may be a premium on policies, savings in best Systematic investment plans and Mutual Funds etc. If your portfolio investment is healthy even post-retirement, you can go in for such investments.
5. Focus on growing funds for retirement
Get in touch with a good financial planner who will be able to guide you through the probable finance requirement post-retirement. Understand from them the best possible pension plans available for you to invest so your retirement life is taken care of in a safe manner
6. Adopt a realistic withdrawal strategy
The investment strategies you plan to adopt post-retirement decides the extent of your financial freedom during that stage of your life. You can take the help of investment consultants to understand about financial products which give you the option to withdraw money in a monthly, quarterly, half yearly and annual periodicities. This planning is absolutely crucial since investing in wrong products that do not allow you to change withdrawal periodicity may topple down your financial planning.
7. Reduce your tax burden
Look out for Investment options which would not be burdening you from the tax perspective. Many financial products attract tax on maturity. When you plan your withdrawal strategy in the perfect manner, you can save a huge chunk of money on tax. Take the advice of an experienced financial consultant who will be able to recommend you appropriate Investment plans. As per Income Tax deductions, there are some Retirement Plans in India which offer tax reduction, so make sure to use this in the most optimum manner.
8. Mediclaim coverage is important
Invest well in advance in good Mediclaim policies so the policies are fully available post-retirement. This will safeguard you from spending prohibitive amounts during medical emergencies. Make good use of the same so on time renewals do not become an issue.
9. Take care of legal formalities
Ensure you have a complete track about your movable and immovable properties at all points of time. Make a WILL stating who must get what proportion of the properties you have earned during your lifetime. This will ensure that your heirs inherit the same in a happy and smooth manner.
10. Plan based on inflation trend
Right from the early stages of your life when your earning capacity is at the highest, plan your finances based on the inflation trends. This will help you plan in a highly pragmatic manner safeguarding your financial interests post-retirement. Inflation is one aspect which may falter all your financial planning when not taken into consideration in a realistic manner.
To summarize
1. Avoid paying debts post retirement
2. Protect your emergency funds from getting frittered away
3. Save exclusively for your retirement
4. Be conscious about the probable cash flow situation post retirement
5. Invest in Pension Plans early so your fund flow gets stabilized post retirement
6. Think about your withdrawal strategy and requirement post-retirement well before investing in products
7. Invest in products that help you save on taxes
8. Ensure you are covered in a comprehensive Mediclaim policy so you can save on medical expenses post retirement
9. Complete all legal formalities pertaining to your properties so every investment you made is safeguarded in a congenial manner
10. Take the past and prevalent inflation trends in the market to arrive at the probable cost of living post-retirement. This realistic approach will help you live a post-retirement life that gives you absolute financial freedom
