Life happens at many levels. It is important to be conscious of the many levels one needs to work on. It takes a minimum of five years conscious and deliberate planning financially to ensure that the next 30 years post retirement are smooth and productive.
A few major things that need to be looked at:
1. Proper asset allocation
It is important to have a mix of safe and growth assets. Safe assets could include senior citizen fixed deposits, public provident funds and secured debentures. Sometimes many clients have exposure to lot of endowment plans which are maturing near retirement. One would also need to consider growth assets such as equity/equity-oriented products which have moderate risk and a conservative equity allocation.
For example: The current balanced advantage category and equity savings category is relatively more conservative and hence recommended. Rental incomes through commercial property investments are better from a longer term point of view.
Generally, the question that is frequently posed is: what is the right mix? About 50 per cent of the income can come from fixed income securities like FDs. debentures, and debt funds. About 35 per cent can come through equity or equity-oriented assets. Rest can be rental incomes. This mix has consistently met inflation increases over a longer period of time.
There are no set formulae cast in stone. Any asset allocation depends on prudent planning and risk-oriented requirements.
2. Taking sufficient medical insurance
A heart surgery costs in the region of Rs 3-5 lakh at one go. Given a long enough time span of 20-30 years it may cost Rs 20-30 lakh. Recently one of our major clients wanted to plan for his post retirement life for himself and his spouse, so he took a Rs 30 lakh cover sufficient for the next 10-15 years.
3. Invest in Preventive healthcare
Our greatest asset is our body. We seldom realise it early. Investing in building our own immunity systems through various forms of exercise like Yoga, walking can boost the metabolism and reduce healthcare expenses.
4. Write a will
Writing a will is one of the important things which helps prevent conflicts within the family. One needs to have a trusted executor who is from the family and can provide emotional support to the family in one’s absence. The will can also be demated like shares. However, it is optional.
5. Initiate giving back to society
One could, as per one’s capacity, choose to give more of one’s time, energy or money depending on comfort and alignment with the cause in question. One of our associates works regularly with Teach India, a not-for-profit organisation to satisfy his need to give back to the society to the best of his capacity.
Planning makes life simpler, a planned life can be happier, at least financially.
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