Planning your post-retirement
Many people grossly underestimate the amount required by them after their retirement. More importantly, we assume that our savings & investment are good enough. We presume that our EMI for housing loan will get over in the next 10 years, children will complete their education and hence, it will reduce our monthly cash outflows to a great extent. Nonetheless, other expenses increase such as healthcare expenses that often increase with the increase in age. Therefore, you need to plan your retirement very cautiously.
Most of the financial savvy and smart investors also do not go beyond bank fixed deposits and other traditional fixed income bearing instruments such as NSC when it comes to planning for post-retirement. However, the corpus needs to be invested for regular income as well as growth, so that the invested assets will continue to support the retiree long into the future.
The investment avenue should be selected based on their safety, liquidity, regular cash-flows, lower tax liability & are able to keep up with the inflation. A post-retirement financial plan should begin with an assessment of the basics like determining the current net worth, expected income, and expenses. Evaluating these factors will help to determine how long the available assets will last in providing retirement income at various rates of investment returns, inflation, and spending.
Portfolio planning
-
Your portfolio should be planned in such a way that will help you in fulfilling the following three objectives.
-
Regular Monthly Pay-out Investment Portfolio – It aims at providing regular monthly income post-retirement. You can invest in the Senior Citizens Savings Scheme and conservative hybrid funds.
-
Growth Investment Portfolio – This will help you to provide growth capital for the next 5 years at minimal risk and hence, one can choose large-cap or multi-cap funds.
-
Liquid Investment Portfolio - Aimed at providing adequate resources for contingency and also, to meet the short-term goals of the customer in the next 2-3 years’ time horizon and can choose liquid funds.