Retirement funding is an important goal for everyone. But it is nowhere on the radar for most people till they are into their forties. It is then that realisation dawns and they start putting away some money for retirement.
Of all the goals one has, retirement is the least glamorous. Buying a home, children’s education and marriage, buying a vehicle, vacations, have a positive, feel-good aspect to them. Retirement, on the contrary, denotes ceasing work, which for some people means loss of prestige and descent into irrelevance. No wonder, it does not get much attention.
For most goals, one can take a loan and get by — except retirement.
For those in salaried jobs, a significant portion of the retirement fund comes from retiral benefits. But again, the retirement fund is greatly depleted in many cases, as provident fund amount is withdrawn for various goals during the working life. Hence, the fund corpus can be vastly different for different people. Most people have other investments too.
However, the quantum of the corpus is not really the problem. A lot depends on expenses and goals as well as commitments during retirement years.
We need to assess whether assets they have are enough to take care of their requirements during their lifetime. This can vary a lot. Hence, the way regular income is set up, as well as investing the balance funds, need to be tailored keeping individual requirements in mind.
It is important to set up regular income during retirement. Some people have pension, rental income, etc. The additional regular income needed in such a case may be modest. There are others who may not have such income sources and for whom regular income needs to be ensured from scratch.
While investing to earn regular income during retirement, expenses must be assessed carefully. Normally, expenses come down after retirement due to lesser spending on commute and work-related incidentals as well as lifestyle expenses. Again, expenses stabilise a year or so into retirement.
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November 01, 2020