5 Things to Ease into your Retirement with Improved Finances

It is never too early but it might get too late to plan for your retirement. We explain how you can ensure good cash flows in your post-working years.

The retirement years can be a time of blessed release from familial obligations, financial worries and in fact, any pressure. But this is true only for those who have sufficient financial wherewithal to tide over the expenses at the time. Have you made a financial roadmap for your retirement life? If not, consider these five steps to get started:

It is never too early but it might get too late to plan for your retirement. We explain how you can ensure good cash flows in your post-working years.

The retirement years can be a time of blessed release from familial obligations, financial worries and in fact, any pressure. But this is true only for those who have sufficient financial wherewithal to tide over the expenses at the time. Have you made a financial roadmap for your retirement life? If not, consider these five steps to get started:

1. Make a monthly expense plan. At about five years from retirement, you will have a good idea of how much money you will need in your retirement years. Your income will stop but your expenses will not – these include daily living expenses, rent/mortgage, unpaid loans, variable costs (clothes, groceries, bills), large costs (vacations, home repairs, etc.) Now factor in inflation and add it to this figure – will your pension or any other source of income pay these expenses? If not, you must consult with an advisor about generating more post-retirement income.
2. How will you be protected? Your retirement years will see you falling ill, developing age-related aches and pains, selling some assets to pay liabilities, etc. You require protection for yourself, your house, your car and other valuable assets you own. If you have not taken insurance, do so now (though the premiums might be higher at a later stage of life).
3. Take a calculated risk. Once your income stops, you might need to make a plan about how to raise finances against the assets and investments you already own. For instance, some people take a loan against mutual funds or open a bank fixed deposit to mature in time for retirement. Others sell off their current homes to buy a smaller one and live comfortably on the surplus funds. Your financial adviser can best tell you how to do this basis your finances and investment risk.
4. Count your taxation. Taxes eat away a chunk of one’s finances every year. Though you will not have a salary in your retirement years, you will still accrue income from owned properties, investments, maturity of fixed or recurring deposits, any business you own, etc. If you are a senior citizen, your income might come within the permissible tax bracket. If not, your financial adviser can show you how to reduce your taxable income.
5. Make a plan for your partner. What happens to the home and the household expenses after you are gone? Your partner might suddenly become vulnerable to financial uncertainty and might have to depend on children and close relatives for sustenance. Make a plan that takes into account your partner’s living expenses, the transfer of assets such as property and gold to your partner, making your partner a nominee for your savings account corpus, etc.