Rohit Sarin

There really is no one-size-fits-all sort of a proposition when it comes to financial planning. Needs vary from one life stage to another.

In the last stage of one’s economic life, where retirement, far from being a blip on the horizon is looming ever larger, the single biggest goal is to protect one’s lifestyle in the years to come.

Of course, the assumption is that you’ve accomplished all other key obligations by now, be it saving for your child’s marriage or accumulating a sufficiently large pool of assets. While the latter is work in progress, preferably starting from your 20s, saving up for your children’s needs is something that would have picked up pace in your 40s.

By the time you turn 50, you would have accumulated a sizeable corpus to cater to their needs without significantly eating into your current income. In fact, your children have probably flown the nest by now, or will do so very soon.

By this stage of your life, not only are you at the highest income level of your career, your expenses have taken a downward turn too. And this should be reflected in a sizeable networth, possibly the highest in your life so far.

The time is now ripe to focus on building your retirement assets and set down new financial goals, be it a world trip or investing in a new hobby. Start by taking stock of where you stand at the moment and then prepare a realistic estimate of your post-retirement expenses.

Once you have a budget in place, you can get a ballpark estimate on the worth of your existing assets using any of the retirement calculators available on the Internet.

Whether the results thrown up by the calculator are favourable or not, this is also a good time to take a fresh look at the asset allocation of your portfolio. Given that by this time you should, ideally, have a surplus on your balance sheet, life insurance is a definite no at this stage.

Also ask yourself how comfortable you are with risk. While your ability to take risk at this stage may be the highest in your life, it is likely to be inversely proportional to your willingness to take it. Hence, now is not the right time to invest heavily in stocks or mutual funds.

All your long-term savings, which you won’t need for another five years or more, can still go towards the equity asset class, but you can start allocating the remaining assets towards debt instruments.

We all envision a comfortable retired life, but by the 50s, those dreams not only crop up with regularity, but with increasing urgency. Smart prioritising is the only way you can build foundations under your castles in the air.

Rohit Sarin, Founder Partner, Client Associates. He can be reached at rohitsarin@clientassociates.com.