Planning for retirement isn't all about keeping some money aside for your future expenses, but rather an analysis of some uncertain future expenses needs to be taken care of. Some unforeseen circumstances take away the corpus built for retirement, thus wiping out money for essential needs. A careful thought to be done for different contingencies that may come up during retirement.
The challenges that one faces while planning for their golden years are inevitable. And the biggest of all are to decide on crucial things like what does one want to retire and what all things that needs to be accommodated, etc. etc. The answer to these questions lies in following points.
•Always account the medical contingencies:
As we are generally prone to underestimate our retirement needs, and think that we will remain healthy, we generally keep the minimal amount for medical emergencies. However, with the age, the trips to doctor keep increasing. Hence you need a deep pocket to take care of yourself and your spouse's medical problems. Taking a hospital rider or health insurance to cover this expense would be a better idea. While picking one, you need to give weightage to the medical history to the family.
•Longevity of life:
It always help to think that you will live for a longer period as it makes you plan for a little more number of years. To sustain for more years, it is important that you concentrate on the financial security for yourself and your spouse. To ensure this, regular income is a must, whether coming from pension from your employer or financial instruments like pension plans and PPFs.
•Beat inflation before it beats your planning:
Inflation affects the way you save and plan for the future. With inflation into account, the corpus looks smaller. Hence, it is pertinent for us to take into account the inflation, with its average rate of 8 per cent for long-turn, and find out how the corpus would look like at the time of retirement. For instance, let's say, Rs. 2 crore, which is enough for you to live for next 10 years today, may not be sufficient for the same period at the time of your retirement.
•Your spouse may outlive you:
The life ends with death, not the responsibilities. The inevitable fact of his / her needs cannot be overlooked in the retirement planning. To ensure that income will not stop even after your death, investing in term insurances or joint life/ last survivor annuity pension plans would be good idea.
•Monitor your investments:
Just choosing some of the financial instruments for retirement planning and investing in them on regular basis is not enough. You need to revisit them time and again to ensure that they are working well, and if required, change the allotment of percentage of your savings. The entire endeavour lies in helping you earn money from your investments.
When it comes to retirement planning, most of us try to avoid it in the first instance. The reaction is natural for many and for most of us it sounds like a death plan. But here, one must get the fact straight that it is not a death plan but a plan for a life. Hence, whatever, you excuse it, it is better to keep it aside and put your brains in devising an apt plan for you.