Dhruv and Kartik

Life’s not going to be smooth simply because you have retired. Instability in the economy or volatility in the capital markets will continue. So, if crises are inevitable, how can retired people protect their wealth against unexpected risks? A written financial plan is a good step towards achieving peace of mind.

Before we get into details, keep in mind three things:

• Life expectancy: Chances are that you will live longer than the previous generations. So you need to ensure you have enough retirement savings and income sources to last you that much longer.

• Maintain liquidity: You need to ensure that you have ready access to your savings when you need them, without any liquidity limitations.

• Health-care costs: Along with higher life expectancy, your bills for healthcare will be more expensive in the future.

So, what kind of financial planning should you do during retirement?

First, review your attitudes toward risk, inflation and taxes. Retirement is not a good time to experiment with your life’s savings. Be aware of the type of risks that you are willing to take and how you can build a margin of safety against them. Are your investments adequately protecting you against inflation? Are they tax efficient?

If you are a senior citizen, are you taking advantage of higher interest rates and tax savings that are offered? Second, understand your priorities.

What would you like to do with your time and money during retirement? Are there activities that you have always wanted to do but have not had the time to indulge in?

Finally, understand your sources of income and your recurring as well as one-time expenses. Do you have rental income or income from investments?

Will you still need to financially support family members? Ensure that you have a health insurance policy in addition to whatever your employer may be offering you on retirement. Usually, it is difficult to get insurance for people above 65 years. And you may face the double whammy of rising healthcare costs and being uninsured.

During retirement it is crucial to maintain a diversified portfolio of investments. But you need to strike the right balance. Don’t take too much risk by concentrating on just a few investment options. However, don’t have so many investments that just their administration takes up all your time.

Retirement is also a good time to execute a will and get it registered, if you haven’t done so already. It will save your beneficiaries a lot of trouble later on. With regular planning, you can prepare to enjoy retired life to the hilt.

Dhruv Agarwala & Kartik Varma, Co-founders, iTrust. They can be reached at contact@itrustonline.in.