Monday, August 6, 2018

Easing into retirement by reducing liabilities

Make your retirement the happiest phase of your life with systematic planning and a few decisive moves today.

Every person who works hard all their lives does so with the expectation of retiring in style. They wish to ease into the last years of their lives in comfort and peace, secure in the knowledge that they’ve done everything they could for the good of their loved ones.

But wishing for a peaceful retirement and actually getting it are two different things. It takes a lot of planning and hard work to be able to retire with grace and dignity. And the time to put in the work is now, while you are still employed and have a regular income. You can follow this simple guide for retiring with complete fiscal security.

Think of retirement as a journey, not a destination.

Many people think of retirement as a phase where one’s active life ceases and one of rest and relaxation begins. But you can fashion your retirement the way you want – you can be as active or as laid back as you wish! It can be a phase of true contentment, as you rediscover and explore the things that matter the most to you. You did not have the time to indulge your hobbies the way you would have liked for several years – retirement gives you the opportunity to travel, make new acquaintances, take up a sport or hobby, be by yourself… the world is your oyster, and it’s time to make it yours!

Calculate how much money you are likely to need after retirement.

Of course, a happy and healthy retirement is possible only if you provide yourself with the means to make it so. This just means that you must plan for it today, while you are still employed and have some years left to retire. Most people mistakenly believe that their savings, pension and a few investments will see them through the retirement years. But these monies can fall woefully short in the face of rising inflation and higher life expectancy than before.

Start by using a retirement calculator to estimate how much money you will need post retirement. The retirement calculator is an online tool that gives you a snapshot of how much post-retirement money you need, and how to make it possible to accrue the same. Feed in details like your age, monthly expenses, estimated age of retirement, average rate of inflation by the time you retire, rate of savings interest by the time you retire, and the preferred growth of investment (aggressive or conservative). The retirement calculator can help you plan the future trajectory of savings and investments. It gives you a useful and realistic ballpark figure that you can work towards.

Buy a good retirement plan.

Once the retirement calculator gives you the numbers you are looking for, you can take the next step that you need to ensure a stable retirement. Apply for a retirement plan with a leading insurance provider in India. The retirement plan will hold you and your spouse in good stead once you stop working and retire. It provides a monthly or annual income that takes care of your household expenses. Or you can use the income for occasional treats like travel or making a new purchase. It gives you the security of knowing that there is a way to have an income when your job income stops. It is important to financially secure your future!

Eliminate the burden of debt – get a term plan.

Perhaps the biggest favor you will do on the retired version of yourself, is to have zero debt. Countless retirees are faced with the prospect of selling their assets to repay loans that they were unable to fully repay while they were still employed. In the retirement phase, you will have no active income and only your assets and investments to fall back on. These offer valuable support in the post-work years, and should not be sold or monetized to pay debt. A good way to ensure that there are no debts remaining is to pay off everything by the time you reach your mid-40s. Meanwhile, you can invest in a term insurance plan that will help your dependents pay off liabilities in your absence.

Have a retirement nest ready.

Have you considered the costs associated with maintaining your stately home once you retire? Your lavish 3 BHK house may find itself empty, with just you and your spouse living in it once your children grow up and move out. A big house is a necessity right now, but it will become an expensive luxury later. You can consider monetizing the unused part of the property by putting up a room or two on rental sites like Airbnb. It provides regular income that you can use to run your household. Or you can even consider selling your large home and moving into a smaller apartment with your spouse, to save on maintenance costs.

No comments:

Post a Comment

15 Stock Investment Tips from Rakesh Jhunjhunwala

1. Always go against tide. Buy when others are selling and sell when others are buying.  2. If you believe in the growth prospects o...