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Plan well for that dream retirement
Ask someone who has been tied to the grind of a 9-5 job, about his life plan and he will probably say his dream is to save a lot of money, retire early, and travel around the world, play golf and spend more time with his family. But few really plan well for that dream retirement .
While deciding how much is enough to retire comfortably is a highly personal calculation depending on any number of factors ranging from your current lifestyle to your general state of finances and health, expert opinion is that retirees typically need at least 70 to 80 percent of their pre-retirement income to lead a comfortable life after they hang up their boots.
Finance is the biggest crippling factor for most people planning early retirement. With people living longer, and with the rising costs of living and healthcare, early retirement is increasingly becoming a tough act to pull. If you are working for companies that have pension schemes, consider yourself lucky. Most people working in the private sector do not have the benefit of substantial pensions, and they have to make the retirement money last for the rest of their lifetime, which, given the longer lifespan, may be 30 years or more. This is certainly not going to be an easy task. It is always a good idea to invest eight to 10 percent of your monthly income in an insurance plan that will guarantee a steady annuity every month when you retire. Start saving when you are young, so that costs are spread over a longer time frame and you do not feel the cash pinch in the later years.
Mortgages: A decade back, people were content to purchase their homes as they approached retirement. But with real estate prices shooting up, if you are planning to use your retirement money on buying a home, you will probably be left with next to nothing to live on when you retire- which means, early retirement is not really an option if you do not have your own home or are paying off huge loans on them.
Health insurance: Even if you are really healthy, medical expenses are going to burn a big hole in your pocket, as you grow older. You also need to plan for emergencies and the best way is to take a health insurance policy to cover for you and your spouse.
Investments: Even if your retirement benefits will enable you to lead a comfortable life, you will still need a nice nest egg to pay for some luxuries, like that trip to Singapore with your spouse or replacing your battered old car with a new one. You may not be able to afford such luxuries unless you have made some smart investments way ahead.
Managing expenses: People tend to underestimate how much they spend in retirement. After all, they have more leisure to shop and spend money, more time and inclination to travel and splurge. If you are worried about managing expenses after retirement, you may need to rein in and cut unnecessary spending. Plan you expenses and prepare a balanced budget that takes care of all aspects of spending.
Lifestyle changes: You may have to make several lifestyle changes after retirement. If you have been living in a big house that was paid for by the company, you will probably find it economical to shift to a smaller apartment. If you are considering relocating to a new place, do consider aspects such as cost of living, taxes, climate, social networks and family relationships, and last but not least, work prospects and opportunities.
Occupation: Retirement planning is not just about finances and health. It is also about how you will be spending your large amount of spare time. Once the initial euphoria dies down, people often get listless and bored of doing nothing. If you have varied interests and hobbies, you may be able to keep yourself happy and engaged through your retirement phase.
A growing number of retirees are finding their way back to the workforce both out of economic necessity and the need to keep themselves occupied. You don’t always have to go back to the job you have left. Try your hand at a different career; take up teaching or consultancy work. Associate yourself with nonprofit organisations or get involved in community service. Whatever field you choose, going back to work is definitely one option that will keep you financially comfortable and emotionally fulfilled.
BINDU SRIDHAR
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