You may not actively earn during your retirement years, but that does not stop factors such as cost of living, medical inflation, lifestyle inflation, longevity and other uncertainties from draining your finances more than you may have expected or accounted for.
Thus, smart planning for the future — when you are largely reliant on savings rather than active income — demands a careful analysis in order to sustain your corpus through various factors, foreseeable or not.
The first step is to identify your goals and aspirational lifestyle post-retirement. This includes your family situation, health status, possible devaluation of net worth due to inflation and other factors. The next step is to assess your current financial status and earning potential against monthly spends in the present and likely additions in the future. This exercise will help determine how much corpus you will require to accumulate by the time to retire to maintain the lifestyle you want.
It is best to start as early as possible so that you can take advantage of the power of compounding — no matter your choice of investment. Be it safer avenues such as government schemes or the equity markets, nothing adds up better than a longer tenure for returns. Choose diverse investment paths as per your requirement, goals and age. For those who start young, a higher allocation towards equities can slowly be tapered toward more conservative options as you age.
You can also choose investment options based on your salary and tax exemptions requirement, as government schemes such as the public provident fund (PPF), employees provident fund (EPF), national pension scheme (NPS) and national savings certificate (NSC) allow you to build retirement corpus, while providing some tax benefit at end of tenure.
Beyond this, you must also plan for emergencies with a separate fund and / or insurance cover to avoid depleting your retirement savings due to unforeseen circumstances.
Once you are retired, CA and financial advisor Nitin Kaushik in a post on X said that it is important to make your retirement corpus “risk-ready”. Here's how:
As explained above, you can invest in the steady options — PPF, EPF, FDs, etc. and opt for annuity plans to extend your payout timeline. However, this does not mean closing all exposure to equity — maybe just reduce it as per your risk appetite.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Jocelyn Fernandes is a journalist and editor with nearly 13 years of experience covering the business, corporate, economy and markets beats in news.<br>
As chief content producer for around three years at Livemint (Hindustan Times), Jocelyn publishes breaking stories, explainers, features and live blogs on a range of business and economy topics, including the Budget, corporate developments, stock markets, income tax, money and personal finance, cryptocurrency, government policy, impact of US tariffs, international developments and more.<br>
Jocelyn's writing philosophy is focused on delivering news in an accurate and accessible format for readers. She thus focuses her news coverage on explainers and FAQs in order to breakdown business, corporate, economic, and policy topics that are of importance to everyday readers.<br>
She holds a Bachelors in Mass Media (BMM) and Post Graduate Diploma (PGD) in Journalism and Communication and has previously written for online business and markets news site Moneycontrol (Network18), Business-to-business (B2B) trade publications — the industry magazines Power Today and Solar Today (ASAPP Media), and the national news agency United News of India (UNI).<br>
Outside of work, Jocelyn keeps up-to-date with local and international news, enjoys reading fiction books, novels and short stories, and enjoys movies, travelling and art.
<br> She can be found on X and LinkedIn, and reached by email: <a href="jocelyn.fernandes@htdigital.in">jocelyn.fernandes@htdigital.in</a> <br> X/ Twitter handle: <a href="https://x.com/scribeJocelyn">@scribeJocelyn</a> <br> LinkedIn: <a href="https://in.linkedin.com/in/jocelyn-fernandes-journalist">LinkedIn</a>
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