Retirement planning is a gradual process as well as a multi step procedure. It includes identifying the time of retirement, finding the goals to be achieved before your D-day, evaluating the expenses and finding an income flow post retirement and giving a serious thought about your dependents.
Some would want an early retirement while others would follow the due course. No matter which group you belong to, go through this 10-step formula to make your retirement life a happy and contented one.
- Know When You Want to Retire
Identifying the time of retirement is an important step. This helps you assess the years left in service and define the goals to be achieved before retirement.
- Goals to Achieve Before and After Retirement
Define your goals you wish to achieve before retirement. This can be your children’s education, marriage and additional goals such as paying off debts and constructing a house. Evaluate those goals which remain pending even after the retirement.
- Total Cost of Retirement
Evaluate the cost of retirement. Calculate monthly expenses and identify the source of income post retirement. Identifying the fund required to meet these expenses and raising them must be one of your goals.
- Your Income Flow Post Retirement
Calculate the source of your income post retirement. You may receive rent from residential or private property, revenue from businesses invested, dividend from share investment or any other kind of monthly or yearly income which is an income.
- Evaluate Total Assets and Investment
Make a clear calculation of your assets and investments. Consolidate these investments and try realigning them. Do a re balancing and make it compliant to your risk profile and requirements. Check whether these investments help you achieve your retirement goals.
- Can I Invest Monthly Now
Now that you know the number of years left in service, identify a suitable SIP (systematic investment plan) to invest as this adds to the retirement fund.
- Find Your Dependents Need
Find the requirements of your dependents and their retirement age. Check whether your children become independent before the retirement. Keep your insurance policies in check and irrespective of the state of your dependents, take a health insurance. This will avoid emptying your pocket in case of a medical contingency.
- Fix Insurance Need
Make sure you have a suitable life insurance policy. In case the earning member passes away, it ensures the family gets compensated with a lump sum amount which helps them move on in life. Check whether the sum assured is compliant with your requirements. If not, take corrective measures.
- Find the Post Retirement Tax
You will have to pay tax for your additional income post retirement. Calculate the tax amount during retirement planning.
- Create a Will Document
Make a will clearly mentioning the property and the name of the recipient. Seek the help of a legal expert to follow proper legal procedures to make sure that the recipient receives it. In shares and mutual fund investments, even if a nominee is mentioned, a legal suit would be enough to stop it reaching the deserved. So, make sure you register the will.
A well-executed retirement plan helps you have a stress free retirement. So, if you have not started one, follow these tips and begin the journey.