CA Sandeep Kanoi
Financial independence is important, but you should also plan for the free time in the golden years. Even affluent families today are concerned about reaching their goals and maintaining a comfortable lifestyle in retirement. Reaching these goals involves asking some pointed questions. At what age do you want to retire completely? How much money will you need to support your lifestyle? How do you make sure you don’t outlive your savings? Where do you want to live? How will you spend your time – traveling? Pursuing your passions? Spending more time with family? Once you have a clear picture of the retirement you want, you can begin to figure out how to afford it through careful planning by clarifying all aspects of your spending, saving and investing.
What is the definition of retirement?
There are many definitions. However, the best that I have came across till date is — “Retirement is a time when you don’t work for money. It’s the time when money should start working for you.”
If you do not like the idea of being dependent on your children or the state or having to rethink your lifestyle once you have retired, you need to start planning now for the time when you will no longer be able to work and earn a salary. The sooner you start, the more chance there is that you will be able to enjoy your golden years, without compromising the lifestyle that you are used to.
Is your aim to retire with enough money to live comfortably for the rest of your life? If so, you will need a lump sum of between 8 – 10 times your final annual salary when you retire. This lump sum would then be invested to provide you with a monthly income for the rest of your life. This is only an estimate and, as you might know, people are living longer and medical care is becoming more expensive. So, the more money you can accumulate during your working years, the better your chances of being financially secure when you retire.
Retirement Planning is more then Financial Planning : Retirement planning is much more than opening a PPF account or purchasing a pension plan from any life insurer or mutual funds house. While these are excellent beginnings, you should also plan for all events that can and would happen after you choose to retire.Planning for your retirement income is definitely very important; however, you need to take into consideration the following aspects –
Keep yourself active – Staying physically and mentally active during retirement is essential for good health and well being. This will ensure that you truly enjoy and relax this well-deserved time of your life. So you must keep your daily diet and workout plan ready.
Decide where you will live after retirement: People staying in their own house and people staying in company provided accommodation should figure out where to stay after retirement. Would you like to stay with friends, or go back to your native place to stay with your family? This decision will help you to figure out how much you will have to add to the kitty in case you need to buy a house.
Plan for disposition of your assets upon your death: This calls for a comprehensive estate planning with all your wills, powers of attorney, trust etc being properly drafted and registered.