Hyderabad: Retirement is a time of rest after many years of working. During this period one can stay calm only when there is no financial pressure. For this, accurate plans should be made while earning. According to the World Bank, the average life expectancy of Indians in 2019 is 69.7 years. This is an increase of almost 15 years compared to the 1980 figures. Longevity is something to be enjoyed, but it also indicates a longer life expectancy after retirement. But, we need to make financial plans accordingly to have a peaceful retirement life.
Start with the plan
We will chalk out a plan before starting the journey. The same is applicable in financial matters also. The important thing to remember is that the plan we put in place needs to be adjusted from time to time to the actual situation. It is not right to have an idea, but we have to put that into practice. The current plan may change completely after 10 years. This is due to rising costs, inflation, changing needs and lifestyle changes. So, first, think about the real situation you are in now and how it might be in the future. Allocate savings amounts accordingly. Retirement planning is an ongoing process while stopping in the middle may disrupt serenity in your leisure life.
To adapt to the lifestyle ...
How do you want your life to be after retirement? Where should be the permanent residence? Own or rent? Need to know the answers to many questions. As you approach retirement, look at what you can do to make these predictions come true. Accommodation, food, general medical expenses and other lifestyle expenses .. to what extent should be calculated. If you anticipate the future from now on .. you should continue to invest accordingly. Inflation should not be forgotten when making projections. If you think you have another five years to retire. Current monthly expenses and calculate how much will be after five years. It is imperative to set up a revenue stream accordingly.
Growth in savings ...
When it comes to estimating your monthly expenses, you need to look at whether your savings and investments are in line with that. You need to calculate the amount that is likely to be deposited by the time of your retirement. Most people invest in fixed deposits, public provident funds, mutual funds, real estate and so on. Of these, those that last until retirement are the shortest. For example, some amount of children’s education is withdrawn for other purposes. Or health emergencies may occur. Keeping all these in mind, the amount of savings should be gradually increased. In the long run, you should choose investments that are conducive to inflation and how much money is needed after retirement?
To make up the deficit...
What to do when you realise how much you need after retirement. Your current savings and how much it will grow. To what extent they will help you to cope with the monthly expenses. For example, let's say you estimate Rs 50,000 per month after your retirement. Suppose your current savings amount to Rs 30,000. An investment plan has to be drawn up for the remaining Rs 20,000. Annuity policies can be considered when choosing schemes that provide security while staying safe. 'Immediate annuity plans are beneficial as they provide pension immediately after retirement while ‘Deferred annuity’ schemes can be opted for when the period is more than 10 years. Arrangements should be made to give a lifetime pension when taking these policies.
You can take advantage of your leisure life to fulfil many of the things you have sacrificed while doing the job. Do not forget that this is possible only when you are financially sound and planned everything ahead of your retirement, says Srinivas Balasubramaniam, Head of Products, ICICI Prudential Life Insurance.
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