Make Your Retirement an Asset, Not Liability
Timely adoption of few guidelines might add lustre to one’s post retirement phase of life
Like death, retirement is inevitable, if one lives beyond the age of sixty, whatever be one’s profession. As you prepare to start a career, simultaneously, you need to prepare yourself for a happy retirement, much before stepping into superannuation. And strive to live as an asset and not a liability. For this purpose, good health and financial independence hold the key, with proper and timely plans, especially for those who have no pension or are in a small business, or are self-employed.
Retirement is just another phase of life:
For enjoying a happy life post retirement, one should keep two things in mind. One, retirement is not the end of active life, but it is just the beginning of another phase of life, where one has to pick up another activity / full-time occupation, to keep oneself as busy as ever before. This could be achieved by nurturing and pursuing some hobby, devoting quality time with family. Secondly, be positive. Do set and strictly follow the daily routine, as if you were going to the office. After retirement, become “Varishth “ and not “ Buddha”. A misconception prevails that “ old age itself is a disease”.
A). Vouchsafe Health: For a happy and satisfying life, good health is not only a prerequisite but a must. Therefore, by all means, maintain and manage your health at every age. Always remember “all avoidable sickness is a sin”. In the true sense, health alone is the wealth which ultimately matters.
1.Adopt appropriate Dietary Schedule: A balanced diet rich in fibre, leafy vegetables, salad including sprouts, fruits and a lot of liquids including water, proves a panacea for good health. In our diet, we should minimise the intake of four white food items namely, salt, sugar, maida and rice, to the best possible extent, especially after the age of 40.
2.Exercise as a habit: Do regular yogic exercise along with walking and or cycling, as a habit.
3.Be positive: Negative thinking is one of the curses one must avoid, and cultivate and nurture optimism, for good physical as well as mental health.
4.Make friends: Make friends by choice and not by chance and nurture friendship.
5.Partner with God: Partner with God by doing some charity, as a norm, by reserving a certain percentage of your income. This could be best achieved by helping any needy or downtrodden at an hour of his need, in your sphere.
6.Mediclaim policy: Get a mediclaim insurance policy of a sizable value. It might prove a saviour at the hour of need, especially in old age. The earlier it is done for the family, the better it will be. Along with that, it would be nice to have term insurance at about 10 times of one’s annual income.
A mediclaim policy for targeted amount of about Rs 1 crore may be available at a monthly premium of about Rs 2,500, at the age of forty.
B). Building financial safety net:
Provident fund : The two important provident funds are Employees Provident Fund (EPF)- for service class, and Public Provident Fund(PPF), for all. Service class people can avail both, but self employed people can avail only PPF. The advantage of PPF is that it ensures income tax rebate, relatively higher rate of interest with compounding benefit. The most tempting advantage with Provident Funds is that these are covered under EEE plan, i.e., the investment, interest earned and the maturity proceeds at present are all tax free. One must have PPF on a continuous basis, for genuine wealth creation, and some financial security.Another very attractive savings scheme for girls below ten years of age is “ Sukanya bachat yojna”. Reasonable amount could regularly be deposited in this scheme.
Invest in Equity Linked Saving Schemes (ELSS): Investment in ELSS is part of tax rebate under 80C section of income tax, with a limit of 1.5 lakh per annum. Under this scheme of mutual funds, try to start your investment journey as early as possible, as well as in the tax year, and go for one with a growth option. Of course, PPF falls under 80C of income tax, but that should best be used as a routine saving, as a tool of wealth creation for retirement.
Go for Systematic Investment Plans (SIP) of saving: Do go for 1-3 SIPs of mutual funds, even stretched little beyond your means, to the bearable extent. The SIPs should be for a long term , say 5 years, and on a regular basis, till one’s retirement! On maturity, the proceeds should go partly in fixed deposits of high-interest-paying private companies and partly in promising MFs or equities.
Invest in Equities within Your Means: Investment in the stock market is a matter of one’s interest, understanding and choice. That is, it may not suit all, but a limited and selective long term investment in equities may be a great and dependable way of genuine wealth creation. For a reserved / risk averse investor, a limited long term investment in 8-10 blue chips, with a focus on some valuable PSU stocks, forming at least 40 per cent of one’s portfolio, might prove rewarding and an added safe guard for post retirement life.
Habit of Saving: Make saving a habit and start as early as possible. As the saying goes “make hay when the sun shines”, implies that start saving as soon as you are earning reasonably well.
Emergency Fund: An emergency fund is a corpus created to meet any emergencies in the family. Give special attention to create a suitable corpus of an emergency fund out of your regular earnings, and in view of your family size including dependents, if any. The allocation to this fund should increase with your increasing earnings. Under normal circumstances it should serve as a reserve.
Share but Don’t Surrender Your Financial Assets: Do keep your family informed about your financial holdings and bank accounts, and even liabilities if any. But keep everything under your control and supervision, write a clear will. This way, you as well as your dear ones will remain happy and on track.
Timely adoption of the above guidelines, might add lustre to one’s post retirement phase of life and usher coveted contentment of being self-reliant. Thus beyond self-help, it might give you power and satisfaction to even help others in need, to a reasonable extent. The mantra is, be positive, avoid criticism and think dynamically.
The author is a Blogger and former employer with the Government of India
DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.