Retirement often comes sooner than you expect it. Are you ready for it?
PNB MetLife 25-12-2018 12:08:49 PM
For most of us, a fundamental aspect while planning our retirement investments is to ensure that our retirement savings provide enough income for our loved ones’ needs and sustain our lifestyle. We also try and allocate our funds in a manner to safeguard that we don’t outlive our assets. There are a wide variety of ways to ensure that we get “retirement ready”.
Here’s a checklist for your retirement portfolio that you can consider:
- Save as much as you can
For retirement, it is crucial that your savings are growing quickly. It makes sure your purchasing power remains steady for a relaxed lifestyle. Since retirement plans are designed to sustain themselves over a considerable amount of time; growth instruments such as ELSS and SIPs make up the core of a good retirement portfolio during this phase. So even if you’re looking at capital preservation, you should have some amount in equity and debt funds as part of your retirement investments.
- Diversify your investment portfolio
While investors in 20s may only choose to invest in different types of equity and thus diversify their portfolio; Those in their 40s and 50s can start shifting to more safe forms of investment such as a guaranteed pension plan or a guaranteed income plan. Debt funds and other moderate instruments with competitive returns but low risks are also attractive propositions. Alternative instruments such as recurring deposits or pension plans can help create funds for retirement.
- Pay off your debt
Ideally, you'd head into retirement debt-free, but in the real world that's not always possible. So it may be okay for you to retire before you pay off your mortgage, cars, or credit cards. Just make sure you understand the implications of retiring with debt and have a plan to pay it off.
- Consider having a health insurance
Healthcare costs are bound to inflate year-on-year. Further, due to improved clinical outcomes and testing and advancements in medical sciences, life expectancy has been rising consistently for years. While this is surely good news, it does also present a challenge to someone who is no longer economically active and productive to afford these medical treatments in case of an emergency in old age. Hence, buying a comprehensive health insurance or critical illness plan will be ideal.
Now, the question is, are you “retirement ready”?
While it may be impossible to plan for every single eventuality, it does offer some peace of mind to know that you’ve taken all the possible measures you could to insure yourself for the future. If you’ve come up with your ideal retirement investment plan, then it should allow you to spend your later years in a manner where you don’t need to compromise on your standard of living. You would also have accounted for some unforeseen expenses that may arise. This would mean your portfolio would have a suitable balance of guaranteed income plans, guaranteed pension plans and capital preservation.
Since each investor is unique, your retirement investment portfolio checklist will also need to be so. It will therefore depend on your individual risk tolerance, investment objectives and the time frames you set for yourself. Eventually, you as the investor and your personal goals will be the greatest influencing factors that shape your retirement portfolio.