Are you going to end your working years with a big fund, a home and dream of living comfortably? If so, then Congratulations! But, taking care of your retirement fund in your old age is not just a financial but also an emotional issue. You cannot ignore either. Because, old age comes with its share of problems such as diseases, faster than expected erosion of wealth, children  fighting for financial legacy etc. These can be drain on your finances too, if you do not have a financial plan in place for your sunset years.
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As the retirement year comes closer, there may be many daunting questions confronting you. First, of course, is whether your accumulated savings are sufficed to take care of your expenses in the post-retirement years. Are you bothering to buy individual health insurance for you and your spouse to ensure continued financial protection after the employer’s group cover ceased on retirement? Have you decided where the retirement money would be invested to ensure your regular income and safety? And the most importantly, have a Will to ensure that your wealth would go to the right people after your death? With improved health care facilities and growing longevity, these important questions are begging to be answered.

Now that you must be get motivated and thrilled to work on your post-retirement finances.

Let’s explore all these questions, whose answers may help you plan your retirement finances in a better way.

Review your Retirement Corpus Need

It is not so simple to find out as it was to calculate other financial goals. To arrive at a perfect number for your ‘retirement corpus’, firstly, you must review many factors and assumptions as you made. Because, if all the factors deviate a little bit here, the result can be very different. For instance, what if you had to retire 2 years earlier than planned, what if your return from your investment were 1-2% lesser than assumed, what if inflation was also higher by 1-2% than assumed or what if you live for 5 more years in retirement and finally what if you are falling short of target.

If you consider all these small deviations, suddenly your calculated retirement corpus may go in ‘deficit danger zone’. In such cases, you will have to make smart and pragmatic thinking can ease the pressure to an extent.

  • Working more years

If you are falling short of target amount, either or both your spouse can work for a few more years if your health allows. Nowadays there are multiple avenues for those who want to continue working after retirement. You can take up consultation work or go into teaching. You can also start distribution of financial products like mutual funds and take agency for selling of insurance products. You may go for other options include blogging and joint social enterprises such as NGO.

  • Relocate to smaller towns

If you are living in metros or Tier-I cities where the cost of living is higher, you can migrate to a smaller town where living cost is low ensuring easy access to quality health-care facilities and favorable weather.

  • Increase Saving Rate and Invest in high-risk instruments

If you have time to reach the goal, increase the saving rate, if necessary, and invest a part of the funds in risky instruments such as equity that can generate returns higher than the inflation rate and shield the corpus from capital gain tax. Finally, if you have just retired, it would be advisable to choose bank deposits and can allocate a part of retirement fund in monthly income schemes (MIS) of banks or post offices. But, do not go for ‘retirement plans’ or ‘pension plans’ in market.

  • Reverse Mortgage property

If you have a property or own home, you can go for reverse mortgage it to a lender where bank, based on the value of property, will pay you a fixed amount for, say 20 years. Since this amount is treated as a loan, there is no tax liability. Besides, you and your spouse can stay in the house till you are alive.

Plan for Health Cover

Health could be your biggest expense after retirement as a lot of money goes towards medical expenses at your retirement age. So, start making a good health plan for your future too. Buy each of you an individual cover of Rs 3-5 lakhs and a top-up cover of up to Rs 10 lakh. Many health insurance companies have special plans for senior citizens. It may be expensive but will be worth it. You must also build an emergency fund to take care of your medical needs. Eat well, eat healthy, sleep well and exercise regularly.

Get rid of Financial Liabilities

If you retire with huge liabilities like housing loan, you must pay off the loan with a part of the retirement fund and take support from your adult children, if they can. You should also get rid of your life insurance policies as you do not need life cover, if you don’t have big financial liabilities at this stage. Hence, you should not invest in any ULIPs fund and other investment insurance products and abstain from insurance agents.

Conclusion

Retirement is not an easy thing to plan for and you are surely underestimating retirement needs. Look around you; see the people who are retiring these days, what are their lives like? Full of struggle? Are they dependent on someone financially? If you are struggling financial right now in your life, imagine the days when you will not be earning and your health will not be as good as it is now.

Nearing retirement? Think again!

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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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