I recently spoke to a group of employees about retirement planning. I was told that the group would mostly comprise young people in the 30-45 age bracket, but as always, there was a good chunk of older people in the audience.
They were left shell-shocked to see some sample retirement plans – the corpus required and the amount required. They had never seen or done a proper retirement planning exercise before. I addressed the concerns of the older audience after the talk but felt an article might help someone in the same boat.
We cannot always blame or judge the individual for failing to plan. Many often get caught up in the family web and spend a lifetime caring for their siblings or parents, nursing a home loan, paying for college tuition, etc.
The past is past. No point thinking about it. Let us get into what can be done now for such individuals.
1. Take care of your health. Time and health constitute true wealth. So, there is little time left to invest and take on some risk, but you have to hang on to your wealth. Eat better, sleep better, live better. Get periodic tests done, etc. Prevention is the best cure. If you need to work for a few more years, you need your health.
2. Evaluate your expenses. Determine the minimum funds necessary to live a lifestyle as close as possible to your current one. Use an inflation of at least
3. Evaluate your current investments. Find your current total retirement corpus. Tag some of your investment to retirement and try not to change tags in future.
4. Evaluate your retirement benefits. You should be able to get a ballpark estimate of benefits like gratuity, leave encashment, etc., as applicable. This could be a sizeable chunk. Add these to your corpus.
5. Evaluate your post-retirement income sources. These could be an employer pension or annuity, rental income, dividends, etc. These will significantly contribute to handling expenses after retirement.
If you want to use a calculator that considers three income sources and retirement benefits with customisable assumptions, you can consider the freefincal robo advisor tool.
6. Estimate your initial withdrawal rate. This is defined as annual expenses in the first year of retirement dividend by the total corpus available. You can use a 4-5% inflation and a reasonable rate of return on your investments for this.
If the initial withdrawal rate is higher than 4.5%, then a pension should be the most important component of your portfolio, and you probably need to find work after retirement. See: Is it Possible to Gauge Post-Retirement Equity Exposure without a Calculator?
7. Plan your second career today! List your skills that could help others, list your passions and find an overlap to turn your skills into income.
Don’t lose heart. With some adjustments in your calculations, lifestyle and plans, you can make it work. It won’t be easy, but then what is?! Forget the past and act now!
Do share this article with your friends using the buttons below.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Podcast: Let’s Get RICH With PATTU! Every single Indian CAN grow their wealth!
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter with the form below.
- Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it’s content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)
