It’s never too late: Prepare now to ensure a comfortable and self-reliant post-retirement life.
In our changing society, the joint-family system has become outdated. Driven by socio-economic realities, the older generation no longer relies on the younger, but strongly desires a greater sense of economic freedom. Irrespective of your family situation, working and generating an income over the age of 50 means that you know retirement is around the corner. If you haven’t already, you are beginning to become aware that it’s time to consider planning for the sunset portion of your life. During your career, you probably put off any number of interesting activities – travel, hobbies, and passions – in the anticipation that once you retire, you’ll have all the time in the world. However, you won’t be able to do much in that time after retirement if you lack the right finances.
Therefore,you need to be making strategic choices with respect to your financial planning for the future. You might believe that the best time to plan for retirement has already passed – however, the best time to start planning is always right now. Here’s how you should start planning for your retirement if you’re in your 50s, while you still have some years of your career ahead of you.
Understand your post-retirement requirements:
To know your financial requirements of the future, you have to decide what kind of life you wish to lead after retirement. In your life, you have probably already assessed your income and expenses, and put aside some money for contingencies, or saved some amount of money. You may own some property or fixed assets, and are hoping that the combination of your savings and property would allow you to live comfortably off your estate. However, you have done so without making any real estimation of your expenses after retirement. Spend some time evaluating your expenses, and how they are likely to change in the future. Being retired might mean that you desire to spend some time travelling. You might have dependents, and you would need to account for potential healthcare costs and budgets for them. The more time you spend contemplating your post-retirement life, more potential requirements would occur to you. Calculate your major potential expenses, and have a clear idea on what the state of your finances currently is – and don’t forget to include your Provident Fund, money from Gratuity and other such funds that you will get upon retirement.
One of the biggest problems in planning and saving for retirement is that the value of savings reduce over time due to inflation. The lump sums that you carry in your savings account might seem considerable, but in decades to come inflation might render your nest-egg useless. Conventionally, people would put money away into fixed deposits; but these instruments are only marginally better than savings accounts, and your money continues to lose value over time. However, this doesn’t mean that you take all your money and bet your shirt on the stock market, either – you can’t afford to risk your savings in your 50s. Your best bet in such instances is to find the right kinds of investments, and to diversify your risk amongst them. Different investment routes have different benefits – an insurance plan would provide coverage and the right kind of insurance scheme might also come with a pension; mutual funds can provide considerably higher rates of return for only a marginal increase in the risk. This is an important option for you as you look to build a sizeable corpus in a smaller duration of time as compared to many others. Consider these options based on your requirements and those of your loved ones and choose wisely.
Plan for the short and medium term too
While planning for the long term, don’t lose sight of the years you have ahead. You should create a strict budget for your current expenses, and do your best to maximize the amount of money you can put aside and save for investment. Making small sacrifices like skipping an occasional dinner can save you thousands of rupees, and this can add up to a substantial amount over time. Further, find ways to monetize your assets. See if you can rent out your property, if you aren’t currently using it; sell your extraneous belongings that you have collected over a lifetime if you don’t see yourself being able to use them in the future. You should also consider investing part of your income into instruments that reduce your tax liability, because every bit of money saved from the taxman is bonus money saved for your retirement. Reduce your tax liabilities and expenses, and maximize your income through your investements – and in no time, you’ll see yourself with a considerable nest-egg just waiting to be spent in your sunset years.
Financial planning has become much easier and more convenient these days, with the advent of the internet and fintech startups that provide a variety of financial planning products. The best fintech platforms will leverage AI-driven algorithms to process and analyze all your consumer and credit data to provide the best financial planning options for you. All you need to do is sign up and get the best options for you, removing most of the guesswork. The earlier you begin, the more you can save and the better prepared you can be. So dust the dirt off your luggage and get ready for this next amazing phase of your life, knowing that you are prepared for whatever may come. Happy retirement!