Topic 1: 7 Facts About Retirement Planning You May Not Have Known
Retirement is an important phase in everyone’s life. There are sweeping changes that can overwhelm you if you are not prepared for it. Before retirement, different aspects of life such as finances, health, time and activities have to be planned for. Most people do not plan for retirement in the right way.
Here are a few facts about retirement planning that are forgotten to be considered in the financial plan –
Forget Retirement – Target Financial Freedom
Retirement is not about age. If you have a decent amount to take care of your day to day needs & other goals you can be financially free.
1.Health Insurance Vs Medical Corpus
Your insurance need gets rejected or you get it at a high premium. Most times, pre-existing illnesses are not covered or covered only after a few years of the policy being in use. Buy a comprehensive health insurance product and remember to be consistent about the premiums. Few people think that they should create a medical corpus & that should be good enough. Not really if you encounter with a serious illness in the early years of your retirement. Medical corpus is required to cover things over & above your insurance. Work on maintaining your health both physically and mentally so that you can have a peaceful life when you are retired.
2.Life Insurance is Lottery Ticket after Retirement
When you are an earning member with dependents, it is imperative to have life insurance. Once you have retired, there are other aspects to look at. If your family members are financially self-sufficient, it is not really required. If you have a huge debt (normally you should retire all your debts before retiring), then a policy may make sense. The proceeds can help to pay off the debt either in full or in part and your family members will not be burdened with it. If you have sufficient assets to take care of your retirement need – life insurance is just a lottery ticket for your family members & should be avoided.
3.Products in Retirement are Different
When you are retired, you would want regular income from your investments. You want more liquid assets. Therefore your portfolio should be skewed towards distribution-oriented products. These products include senior citizens savings schemes, lesser real estate & maybe annuity if you are ready to understand the complexities. Liquidity in your investment products is a must in retirement – it gives a sense of confidence.
4.Asset Allocation after retirement
The portfolio composition has to be in tune with the changes in your life. When you are younger and have fewer financial commitments, you can have an aggressive portfolio where the risk-reward ratio is high. At the same time, you have to invest such that you will have a corpus to fulfill your financial goals like buying a house or ensuring a comfortable retirement. Invest early on so that the money you earned in the form of interest and dividends also gets invested and earns more money.
5.Review of Portfolio
Many people have the same investments at 50 that they had when they were 30 years old. You are most likely to be in different stages of life at 30 and 50 and so your portfolio should suit the stage of life. Review your portfolio regularly and tweak it to suit your goals and current financial situation.
6.Regrets in Retirement
Here are some regrets/wishes that people have shared about retirement –
7.Goals after Retirement Age
What about a foreign trip or a long cruise to Alaska that you always wanted. What about birthday celebration of your grandchild or gift to a needy in the family or charity to any organization. So don’t think that you will not require additional money than the day to day expenses. Plan your retirement properly. Changes in life keep happening. You have to ensure that you are financially independent in the golden age of your life.
Forget Retirement – Target Financial Freedom
Retirement is not about age. If you have a decent amount to take care of your day to day needs & other goals you can be financially free.
1.Health Insurance Vs Medical Corpus
Your insurance need gets rejected or you get it at a high premium. Most times, pre-existing illnesses are not covered or covered only after a few years of the policy being in use. Buy a comprehensive health insurance product and remember to be consistent about the premiums. Few people think that they should create a medical corpus & that should be good enough. Not really if you encounter with a serious illness in the early years of your retirement. Medical corpus is required to cover things over & above your insurance. Work on maintaining your health both physically and mentally so that you can have a peaceful life when you are retired.
2.Life Insurance is Lottery Ticket after Retirement
When you are an earning member with dependents, it is imperative to have life insurance. Once you have retired, there are other aspects to look at. If your family members are financially self-sufficient, it is not really required. If you have a huge debt (normally you should retire all your debts before retiring), then a policy may make sense. The proceeds can help to pay off the debt either in full or in part and your family members will not be burdened with it. If you have sufficient assets to take care of your retirement need – life insurance is just a lottery ticket for your family members & should be avoided.
3.Products in Retirement are Different
When you are retired, you would want regular income from your investments. You want more liquid assets. Therefore your portfolio should be skewed towards distribution-oriented products. These products include senior citizens savings schemes, lesser real estate & maybe annuity if you are ready to understand the complexities. Liquidity in your investment products is a must in retirement – it gives a sense of confidence.
4.Asset Allocation after retirement
The portfolio composition has to be in tune with the changes in your life. When you are younger and have fewer financial commitments, you can have an aggressive portfolio where the risk-reward ratio is high. At the same time, you have to invest such that you will have a corpus to fulfill your financial goals like buying a house or ensuring a comfortable retirement. Invest early on so that the money you earned in the form of interest and dividends also gets invested and earns more money.
5.Review of Portfolio
Many people have the same investments at 50 that they had when they were 30 years old. You are most likely to be in different stages of life at 30 and 50 and so your portfolio should suit the stage of life. Review your portfolio regularly and tweak it to suit your goals and current financial situation.
6.Regrets in Retirement
Here are some regrets/wishes that people have shared about retirement –
- I wish I had taken health insurance before. Now I have to buy at very high premiums.
- I should have continued to work for some more years. I would have earned more and had a sense of purpose in life.
- I should have planned my retirement better rather than thinking I would work till I am 58.
- How long will you keep your investment? – You should estimate the time period up to which sector will continue flourishing.
What about a foreign trip or a long cruise to Alaska that you always wanted. What about birthday celebration of your grandchild or gift to a needy in the family or charity to any organization. So don’t think that you will not require additional money than the day to day expenses. Plan your retirement properly. Changes in life keep happening. You have to ensure that you are financially independent in the golden age of your life.