Retirement is a radical mental change that can be quite disruptive as well if not planned well. Do you think you have planned your retirement life well in advance? There should be some key questions that you should be asking yourself to ensure that your retirement is peaceful and financially stable.
Retirement is considered finish line for most. After all, it means not having a job, sitting idle at home and thinking which hobbies to take up next. But it shouldn’t be considered that way. If you have planned your retirement well financially, then it does not have to be your finish line.
We have rounded up some key financial advice for you that you an act on today, to manage your retirement better:
Voyage of Discovery
Before jumping into getting money allocated towards your retirement fund, go on a voyage of discovery. How much money do you actually need during your retirement? Of course, you can’t really plan for how many years you are going to live post-retirement, but you can definitely plan on how much money you would need to manage your expenses on a monthly basis. To do that, list all your current monthly expenses. Evaluate how much you would need to run your household once you retire. Take stock of all your loans as well as bills. That will be the precursor to planning and managing your retirement well.
Save And Invest
Invest, invest and then invest some more. Key to retirement fund management is to invest more and invest wisely. If you do, you will be well on your way to build a good financial cushion for yourself. If you have been trying to evaluate key trends regarding investments, start with understanding the returns you get through Mutual Funds, Stocks, and Money Market Instruments. For instance, there are a few basic categories of Mutual Funds that you can invest in. For example, balanced funds are a combination of different asset classes, while stock funds only invest in stock market. Each fund has different risk versus return profiles, and understanding these differences can help you invest and save better.
Build A Cash Bucket:
Nearly every advisory and financial expert would tell you that even if you diversify and invest, you must always have a cash cover that can help you cover your emergencies and unforeseen situations. Considering the stability of our financial market, a cash cover can help tide you over in case of a market crash, and can assist you to recover and maintain your financial standing while you wait for the market to recover. For example, if you were retiring in 2008 or 2009 instead of 2007, you would be sitting idle with no money as stock markets had crashed tremendously in the wake of the global financial crisis. For people, who still had some cash cover, a cash bucket to tide them over, they would still be able to manage their expenses while the market recovered.
Diversify and Diversify More
The key thing to remember while making retirement fund decisions is to diversify your fund portfolios. Pakistan’s stock exchange is currently ranked as one of the top 5 stock exchanges in the Asian region. But it is only less than 10 years ago, when it had crashed drastically, wiping away billions of rupees in investment. Similarly, foreign currencies have also witnessed fluctuations. Therefore, diversify your portfolio. Protect your retirement money in different instruments and focus on creating a balanced risk and return profile that you are comfortable with. Talk to your financial advisor, banker and insurance broker friends who can help analyze different instruments and return profiles for you.
Insure Yourself and Nominate Beneficiaries
Among other things, insurance is one key to managing your retirement well. Insurance that either matures at the time you retire, or helps you cover your medical and emergency expenses during your retirement, both can be beneficial for you. If it matures at the time you retire, you can have a good chunk of change to invest and earn returns off of, and if it continues, you can claim insurance any time you have a medical need. As we age, obviously medical requirements continue to increase. Insurance can help you cover these needs. Also, always nominate beneficiaries. This may not be a benefit to you, but you would be doing a great disservice to your family members if you don’t nominate beneficiaries, and where they would have to fight tooth and nail to justifiably recover or distribute amounts.
It is never too early to start planning for and saving for retirement. If you have debts or credit card loans, then today is the day to start planning on how to pay them back as quickly as possible. Moreover, it is key that you start saving from today. The earlier you start, the bigger your nest egg is going to be, and the more comfortable your post-retirement life can be.
Post-retirement does not have to sound as ominous as it does sound at the moment. A bit of planning, and a good amount of research, and meticulously saving for the future can help you to plan a good, comfortable post retirement life.