Are you nearing your 50s? Is effective retirement planning still on the cards? And are you panicking that you haven’t thought about it? Well, it is certainly a matter of concern. However, there is always a way to do retirement planning, even at 50. You will have to follow certain simple steps based on your income, liabilities, future financial plans, and family commitments.
Further, you will have to research and compare the different retirement plans in India to provide the maximum benefits. With this basic framework, you can make a well-defined retirement plan. Here is a checklist on how you can proceed.
Why is Retirement Planning Necessary?
Retirement planning is the best way to ensure a comfortable and peaceful life after your employment phase. Here are a few reasons why it is necessary:
- It will ensure an income for your basic survival for the next 20 to 30 years.
- It will help you manage unexpected short-term commitments and other medical emergencies that might arise.
- You will be financially independent.
- It will help you protect the financial future of your family.
How to Make a Retirement Plan When You are in Your 50s?
1.Analyse your financial status:
The first step towards making a retirement plan is understanding your financial status. You have to review your steady flow income, monthly expenditure and the extent of liabilities. At this stage, you would have set a standard of life that you would wish to continue. You must have also understood the spending pattern of your family. Retirement plans should not let you compromise or make changes to your lifestyle. It should enhance protection and let you live more comfortably.
2.Set your goals:
The next important step in retirement planning is to set your financial goals. It can be in the short term or the long term. For example, you would prefer to renovate your house before you retire. Such goals that incur huge expenses should be accounted for by making the necessary allocation. Apart from such goals, it would help if you considered any emergency expenses that you might come across. Including such expenses will give you an overall picture of the funds required for financial planning. If you have dependents in your family, ensuring financial protection with life insurance for retirement is also an important goal.
3.Organise existing financial instruments and funds:
Now that you have an idea of your financial status, short term and long-term goals and the expenditure for a routine life, examine your financial resources. For example, you might have a provident fund with your employer, fixed deposit, or any other savings. Calculate the total of this surplus amount and derive an estimate.
4.Pay off debts:
Based on the derived amount, you can allocate funds for your short term and long-term goals and paying off any other debts such as the repayment of your housing loan, vehicle loan, etc. You can seek financial products that provide regular income, or a lump sum based on your requirements with the remaining amount. If there is no fund left, you can modify the funds associated with the financial goals and invest in financial instruments till you retire that can assure accomplishing the goals in future while making way for your retirement expenses.
5.Determine the expenditure for a routine life:
Before you look for the financial products, it is time to understand the monthly expenditure you will incur as a family. It will give you a fair idea of the monthly income you should incorporate into your retirement plan. Exclude unnecessary expenditure and try to keep the expenses simple.
6.Research and compare the different financial instruments:
Financial institutions have introduced different types of retirement solutions that you can utilise based on your requirements. Consider the annuity insurance scheme provided by life insurance providers that provide life cover and annuity options. You can choose the immediate or the deferred annuity options based on your requirements.
With the annuity calculators in India, you can calculate the payout benefit from various policies based on the premium amount you can afford to pay. The Tata AIA annuity scheme provides different annuity payout options with variable payout amounts having no maximum limit. You can choose the plan based on the monthly expenditure that you had just calculated.
7.Start investing your income:
Now that you have organised your savings based on your goals and future retirement expenses, you can start investing in other financial products if you are still earning to increase the retirement corpus. When you accumulate more, you are increasing the financial security of you and your family. In addition, there are comprehensive insurance plans that can provide life cover and savings, and investment solutions. Choose secure options that do not involve the risk element because you are heading towards retirement, and you must stay risk averse.
The retirement phase is the most pleasant stage in your life. You must ensure that you receive maximum financial independence to engage in a peaceful life. The significance of planning for retirement should be realised early in life. If you have not done the necessary financial planning for retirement, even in the 50s, you can still make it if you follow certain simple steps.
Analyse your income and set your financial goals first. Then, organise your financial resources, allocate funds for the financial goals, pay off your debts and set aside a specific fund for your retirement solution, such as purchasing an annuity plan. Finally, start investing more and accumulate a larger corpus to stay secure, confident, and happy if you are still working!