One of the important premise on which retirement planning is undertaken
is calculating life expectancy. Above all things only death is certain and inevitable.
But at times, death may delay its plan and life takes a new turn and leaves you
with multiple queries. We encountered many such queries from our clients in our
recent interactions leaving them with a thought if they have really saved
enough. As a financial planner we calculate the corpus considering all cautious
return rates and highest inflation rates. But at times, these calculations also
can fall short to actual life.
So if you face a situation where the actual life span exceeds your
expected life calculations, then it is wise to take a precautionary move a few
years before the D day. So here are few things we suggest to modify the
existing planning.
a)
Seek exposure in Equity – Whenever you devise plan for
retirement ask your advisor to recommend some component investment in equity. Equity
is useful tool for capital appreciation. If you are currently retired then seek
to reshuffle your portfolio with partial exposure in equity. But give it tenure
of at least 5 years. Also, seek funds which have smaller AUM as it gives scope
of fund improvement.
b)
Don’t fight way to reduce expenses – Retirement is
rightfully called as golden period and it will be wrong to cut short your
expenses to meet the survival. Also, it is not just about surviving it is about
living this time. If you need to add to corpus then always look towards your
net worth. Fight out the unproductive assets like jewels, or expensive art. If you
had planned to pass it on to next generation for lineage fame – leave the
glossiness and get practical.
c)
Be frugal and not a miser – there are many times that
we have hoarded things around which are not of any actual use to us. So it is
time to get a junk sale arranged for it. It would save you the pain of getting
any additional space for preserving it and also arrange for some quick
liquidity. It is not a long lasting solution but a temporary fix.
d)
Rejig your inheritance plan – beyond your love and
care, all that your child gets depends completely on your own wish. So, if life
has altered its plan then even you need to make the necessary tweaks in your
thinking. It is not necessary to leave back all your created wealth for your
children. Let them feel the heat and struggle before you put them in a
comfortable padding. Figure out all the usable capital market instruments that
you can you use with regular income generation if possible without harming the
capital invested. Like try dividend mode over growth or interest payout or
start to make your 80C investments in ELSS over PPF.
e)
Use lifelong annuity – Annuity payments are ideal for
regular income when one is not making regular money. So whenever you buy an
annuity program from any insurance company ensure you select the mode of
lifelong annuity in it.
Thanks and Regards
Team
Email: saarthifp@gmail.com
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