Five things you need to do to secure your retirement

Representational image 

New Delhi: Retirement planning is the most critical thing in an individual's life. While you need to save a fixed amount every month (based on your current expenses) to secure your retirement, it is also crucial to plan for certain other things, which if not done may deplete your retirement savings. Here we are listing out five critical things you need to do to secure a timely retirement.

Building a retirement corpus

Whether you are a salaried employee or a businessman, building a retirement corpus is a must for everyone. Financial planners say your post-retirement monthly expenses will be minimum 50% of your pre-retirement monthly expense. For example, if you are 40 years old and your present monthly expenses are Rs 1 lakh (including EMIs if any), then the present value of your monthly post-retirement expense will be at least Rs 50,000. So accordingly an individual should plan how much he needs at the time of retirement and how much he needs to save every month to build a corpus that can generate the income, matching your retirement expense. While planning you also need to take care of inflation during the post-retirement age as life expectancy is increasing day by day and you need to plan for a retired life of at least 25 years.

Creating income generating asset

Creating an income generating asset or an alternative income is critical to financial planning. Your required retirement corpus will be much less if you build an income generating asset (like a house which you can rent out) during your earning phase. Similarly, if you buy an annuity or built an equity portfolio which will give dividend along with capital appreciation, then it will be of great help during your retirement. 

Providing for other goals

While planning for retirement it is crucial that you also plan for other expenses like children's education, marriage, emergency corpus etc. If you don't plan and save for these expenses it will jeopardise your retirement as it is very likely that you will dip into your retirement saving. Building an emergency corpus is also equally important as in case of some medical emergency you are likely to withdraw from your retirement savings like EPF or PPF.

Post-retirement planing

Retirement planning does not end when you retire. Given that retirement life is increasing with rising life expectancy, you also need to plan for the period after retirement as well. One needs to plan for liquidity, regular income and growth of retirement corpus so that it can cater to the inflation during the retirement phase. For example, if you have bought an annuity which will give you a monthly income of Rs 50,000 at 60, then the value of Rs 50,000 will not be the same when you turn 70. So your retirement corpus also need to grow during the post-retirement phase so that your income grows. Wealth advisers say you need to park some amount of your retirement corpus in equity assets so that it grows and increases your retirement income every year.

Keeping yourself busy in retired life 

You need to make sure that you are engaged in some activity after your retirement. Keeping yourself engaged in some activity reduced the chance of falling sick. Typically people fall sick when they suddenly shift to a sedentary lifestyle. Fighting boredom during retirement can be tough and lead to stress.