Retirement Checklist: How to get ready for retirementWealth Prime
Let us agree; we all will retire one beautiful day from our work lives. It might be sooner for some but quite late for another group of the working population. But how well did we plan for our life after retirement? Everyone amongst us wants to spend a relaxed life post-retirement by doing things which we always wanted to do, such as working on our hobbies and having a peaceful life. But are we really in a position to do so?
Here are the four steps on how to create a plan for retirement and know more about your financial future. To create a checklist for retirement, let us have a look at the four phases in order to achieve a secured life.
Here’s what we can learn from asking ourselves some very important questions, the answers to which, will help us to know where to begin with and how to plan. So, before getting started and going ahead, making a plan, first ask yourself these questions –
1. Do I have a detailed written plan?
A detailed plan includes not just the basic information about yourself and your expenditures but rather it includes detailed information about you and your family as well. So, start with writing yours and your spouse’s information, retirement incomes, savings, pension, annuities, income from returns, income from deposits, provident funds, etc., at the first under income section. Then at the minimum, you have to write about possible medical costs, long term care costs, general expenses, housing costs, big time expenses (which you can foresee and also predict possibly), debts and analysis of paying them off.
This possible account can help you know all about your life in detail before making a plan.
2. Do I feel the plan accurate to fit in my lifestyle?
Now, you have to think about all the possible scenarios and take a hard look at your plan. What if at some point you run out of money? How regular is the cash flow? When can your expenses exceed income? What risks can the plans face? What will be the value of savings in the next five years?
For this, it is essential to take a good look at each and every detail of your plan. You could also possibly work with a retirement advisor or take help with financial consultants for the plan. Another good option is to talk to your spouse and close family members like your children, about your plans and discuss the details in terms of accuracy with them.
3. What do I want to do after retirement?
Now let us not forget; retirement is not just about calculations. You should also think about what you want to do. Focus on the personal aspects and hobbies after retirement, see what can get you content and happiness.
Implementing the plan
Now we move on to the second stage after we have started with the formation of the plan. Now we have to implement what we have evaluated and should get started for a better and secure future.
1. Looking into income and expenses
We all want to look and predict how well secured can our future be. If not always a correct prediction, we can always take guesses? Let us know more about our expenses, returns, medical costs, social security benefits,and other passive incomes. Write down the numbers now.
2. Do I have guaranteed income?
Is the cash flow enough to cover regular expenses? What all income source is regular and what comes once in a few months? What all returns do I get? How often do I get returns from savings and deposits? Make sure you are clear with a vision on what you get every month, how much you spend, how much is in the bank and how much is in retirement or PF account. Also, think of other assets which are there by your retirement time. Keep track of them and list out the approximate interest or returns you get from the principal account. You should note it down to see and think about your expenditure or expenses after retirement.
This will help you evaluate if your guaranteed income is more or less than your expenses. In case it is less, you may want to postpone your retirement or reduce expenses or model alternative social security plans as well.
3. Can I afford medical insurances?
Medical tests go for most of the economic shocks in several households in India. Let us remember that it is crucial to have insurance for medical emergencies. Make sure that you understand and plan accordingly on the medical costs and how much the insurance would cost you per year.
4. Do I have any other potential sources during emergencies?
You still need to be prepared for other emergencies during your planning. Let us think of the worst scenario. Are you well equipped to help your spouse in case of a medical emergency? Can you manage in the case of death of a spouse? Do you have any assets like a house which you can sell at some point? Do you have any other inheritance? One should be prepared to face such kind of situations, and this way of imagining future in great detail will help you think about the worst cases as well to be prepared.
Maximize wealth and minimize risks
In the third stage, let us see how well you can diversify the wealth and savings in a safe way.
1. Do I have the right allocation of assets?
It is always better to not keep the entire savings and assets in one form only. Various asset allocations and diversifying your savings is the best way to go about for a risk-free life and to make easy withdrawals as per different circumstances. You should also think of growing worth after retirement through several schemes. Think about the form of assets and investments that are risk-free and have better return scheme. For instance, if you keep some savings in bank deposits, the other savings can be kept in mutual funds and shares. Therefore, do not invest all of your savings in one place. This can help you maximize your wealth and returns too.
2. Did you reduce your tax liabilities?
Taxes can make significant source of your spending and expenditures as well. Think about tax saving options like PF, National Saving Certificate, Tax-free bonds, and tax saving mutual funds. Hence it is better to take taxes seriously and place yourself in lower tax brackets.
3. Did I optimize my existing assets?
Last but not the least, did you think about optimizing what you have best in hand? Figure out the best plans for yourself which can help you reduce your expenses and maximize the assets and resources. Think about all the scenarios possible for your case. Can you think of renting a part of your home which you do not use? Can you live happily in a tiny home? These can help you to answer better when it comes to the question of how to optimize what you have.
Adjustments in the present plan
Forget not, it is not just about organizing a plan and going about it. You should also keep the plan updated as required and necessary. As per circumstances and situations, you should evaluate, and change it. Think of different ways as days pass on, like are the investments same or have they grown as you expected? Are the spending and savings equal as you have planned? These will help you update and make necessary adjustments when required to keep up with the cash flows.
You have worked for more than thirty years in your life; now is the time to sit back and relax and do what you love the most. But for having a secured future, efficient planning and a focused vision can help you lead a better life even post-retirement. Financial security plays a significant part to lead a happy life. Hence make sure not to neglect out these points for a better future.
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