How to meet your post-retirement goals?

Post-retirement planning is one of the key decisions that will determine your financial security as and when you grow old. But unlike the previous generation, we don’t have the luxury of monthly pensions post retirement.

The first thing to keep in mind while planning your retirement is to calculate the monthly income required post service. The second step it to calculate the retirement corpus needed to fund the estimated income. Thirdly, it is critical to find the amount of savings requirement to achieve the target retirement corpus well before time. This is retirement planning in brief.

Shalini Dhawan, financial planner and founder of the wealth management firm ‘Plan Ahead’, answered a few questions on post-retirement financial goals for Money9.

A lot of individuals begin thinking about retirement funds very close to retirement or when they receive retirement benefits from their employer. A good day to begin investing for retirement is today. What that means is that it is never too early to start. One can start in their 30s or 40s also.

It is prudent to take care of healthcare expenses by having a suitable health insurance cover. When taken at a younger age, a health cover is the most reasonable way to take care of medical expenses. In the case where individuals haven’t done that, then alternatives in an older age group may be less as insurance plans for senior citizens are few in number and fairly expensive. In that case, making a segregated corpus for medical eventualities would be prudent.

An individual’s asset mix is a combination of many parameters such as net-worth available for retirement funding, post-retirement casual income, risk appetite. It is a myth that retirees should save only in conservative assets. If a retiree has sufficient retirement corpus and or income, aggressive investments can be looked at. How much quantum etc. would be dependent on the above parameters.

As financial planners, we usually ask clients to draw up a detailed vision of retirement including what expenses they visualize to make in their retirement, including gifting, leisure, entertainment, travel, milestones celebrations, and so on. Once an individual has understood these details drawing up a monthly or annual expense budget is easy. Post that one will have to then see whether one wants to make use of lumpsum funds or use parts of their retirement income for such expenses. By doing this, an individual can gauge whether they should spend as per their plan or whether they have to push back the spending.

One common mistake while planning for retirement is to be conservative with your investments. While generating a corpus in your 40s for example one can invest aggressively and then look at moving to conservative assets while getting closer to retirement age.

Another common slip that happens is when parents go overboard in taking care of children’s marriage expenses due to social pressures while sabotaging their retirement funds. Many a times, parents dip into retirement savings in order to have a big wedding and later find insufficient corpus for themselves.