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Retirement Planning: Things to Look Out for to Avoid Financial Pothole

Planning your retirement can be tough as you get only one chance to do it perfectly. If you fail, you land yourself in a financial pithole. So, while you’re planning your retirement-be careful! You are just one step away from a bucket full of chaos.


Here are a few things you should remember while planning your retirement:

Decide How Much you’ll Need: Post-retirement financial planning requires clarity on the amount needed. So, first thing is to decide how much you’ll be needing during your retirement days. Though it will be difficult to anticipate the exact figure, try to be pragmatic while calculating the amount.

Plan your Post-Retirement Budget: The second essential requirement is a post-retirement budget. Your current budget has so many elements, full of important and materialistic expenses. However, your post-retirement budget should be free from such unnecessary expenses and include only what’s absolutely necessary.

Make a High-Priced Investment: When you plan your retirement, you’re planning the total cost of living for at least 20-30 years which help to secure retirement life. Thus, the investment needs to be huge, and more than sufficient. Thus, one way is to invest a large sum in multiple long-term FDs which can garner high-interest post maturity. Or, you can invest in a high-priced asset like a house or a commercial property which can be encashed later to meet the living expenses.   


Ensure Regular Cash Flow: When you cross your retirement age your income sources will deplete and you’ll need backups to meet the post-retirement expenses. So, if your current job doesn’t offer you post-retirement pension benefit, it’s better to create one for yourself on your own. There are some schemes such as non-cumulative FD schemes which pay the interest amount at regular intervals, maintaining a regular cash flow. You can invest in non-cumulative FDs and create your own post-retirement pension plan. 



Extra Savings to Meet the Financial Deficit: Over the years, the cost of living will increase and it would be more difficult to survive with the same budget as of now. Thus, when planning your retirement, consider this speculation as a major factor and plan your post-investment budget accordingly. To be on the safer side, it’s always wise to keep an extra investment that is sufficient to meet the deficit. You can invest in long-term fixed deposit for a longer tenor, and use the maturity amount later to meet the financial deficit.

Bottom Line: You can never anticipate the right figure that would prove sufficient to survive retirement easily, but what you can do is be prepared for the worst-case scenario. So get an idea how much you need for retirement

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