Top 10 Things to Consider Heading into Retirement
/2015-11-26 10:16:51
Vikram Singhvee

1. Life Expectancy
With the ever advancing medical sciences in today’s times, one has to consider longer life expectancy than they would have done say 20 years ago. If a working couple is assuming a retirement age of 60, then you have to assume that at least one spouse would live more than 25 years after retirement.

2.Enjoying Retirement
Advisors generally tend to scare individuals by talking about running out of money after retirement and miss out on discussing the more important aspect of enjoying retirement. Some individuals are also concerned about leaving behind too much money after they die, hence a well-balanced plan encouraging a healthy withdrawal rate is important.

3.Increasing Health Costs
There has been a general increase in medical expenses over the past few years due to improvement in medical sciences and on the other hand the increasing life expectancy itself contributes towards increasing health costs.

4.Withdrawal Strategy
Up until retirement every individual is used to receiving a fixed amount on a monthly basis as salary. Moving from that situation to being dependent on the portfolio to provide for your monthly income can be a daunting scenario. Maintaining a cash reserve (liquid/emergency fund) is extremely critical as this will ensure that your entire portfolio does not have to suffer a poor return due to lack of planning. The other important factor is to understand the tax aspect of withdrawing from the portfolio on a regular basis.

5.Risk Adjusted Returns
While there is an obvious movement from high risk investments to safer asset avenues, maintaining an ideal asset allocation is of paramount importance. We are entering a phase where interest rates will reduce further, hence debt (FDs and bonds) might not be the best instrument to look at and balancing the portfolio will be very important.

6.Expenses
Retirement expenses are bound to differ from your regular work life expenses. There will be more spending in the early years of retirement, you may notice a dip after that and then a sudden rise due to increasing medical expenses. Another important thing to take into consideration is inflation post retirement. There is an obvious expectation that inflation in India is going to reduce in the future and different kind of expenses can have different inflationary pressures.

7.Pension Income
Having a regular flow of income through pension is a good thing as it brings about a certain amount of certainty into the plan and it also tries to subside the risk of living for too long in case you get into a situation where you have considerably depleted your retirement corpus.

8.Estate Planning
Every individual wants to leave behind an estate for their kids and grandkids, however, if that is not planned, it could lead to issues amongst them. Having a will/trust in place with designated executioners/trustees, as the case may be, is very important. Though there is a lot of ambiguity on whether or not estate tax will make a comeback in India, having a well distributed estate plan will help your successors.

9.Senior Care
There comes a point in time where living alone and taking care of all your needs might not be that easy. Senior care is now available quite easily in the form of health care, everyday conveniences and social engagements. Identifying these options would be good especially if one were going to be living alone.

10.Keeping Yourself Busy
Enjoying retirement is important but keeping yourself busy can have multiple advantages. It reduces loneliness, brings in extra income, keeping a schedule and meeting different people on a regular basis will also help improve the emotional and mental health of retirees.