Off late I came across an elderly in his early 70s, a stage in life when one would want to feel financially secure and depend on his life’s savings. But he suddenly realises that he is left with a meagre retirement corpus that would barely serve him for next 4-5 years if he continues to maintain his current lifestyle. And to compromise on the way you have lived through your prime at the last stage of your life is a rude thing that can happen to anyone. Carrying the thought further a person is susceptible to five retirement blunders.
Let me enumerate them to you.
- To outlive your retirement corpus: Not having a cautionary foresight on your expenses, inflation, inability to tackle low Interest rate regime, failing to minimize taxation and being conservative with trending investments have the potential to ruin your retirement dreams. Ironically, most investors are clueless of their retirement corpus which should help them see through their second innings of around two decades or even more in peace and flourish.
- Not factoring additional Health Care expenses: A plethora of treatments and add-ons are beyond the purview of health insurance cover but you will still need them to lead a normal life, like hearing aids, dental treatment, home care and doctor visits to name a few. They may sound cheap but in reality they are expensive and can bite away a large pie out of your monthly budgets.
- Choosing the wrong Asset:– Many investors have lost their hard-earned life’s savings in financial scams. Scams and derailment could arise out of top-rated corporate bonds, junk shares & even other financial instruments. Therefore one needs to tread with caution at this late stage of life because losses are irreversible and hey days of life are over. Every step therefore must be calculated for risk analysis and rewards anticipation.
- Not having a retirement plan is suicidal: What gets measured gets managed. It all begins with an eye on your retirement. The lifestyle you wish to enjoy, expenses that you foresee, projection of inflation and pockets where you might need more cash flows. It is a bit complicated but not rocket science to figure out the kitty you need and build a road map for your second innings. A good Financial Advisor can help you sail through.
- Not Implementing Estate Planning: A close friend of mine had to struggle through the complicated legal process for a good five years to get his ancestral property transferred in his name. The place was where he grew up, where he spent his childhood, it was his own place, but he had to run around, spend lacs to get the entitlement of it as his parents had passed away intestate.
Most of us would ignore it assuming that this is not for them. But how cruel will it be for your dependents, whom you love and wish to transfer all your assets, but they have to struggle for their own legitimate right.
We may think it is a very complicated process, but in reality it is as simple as writing down your broad asset details and to whom you want it to be passed on to. Two witnesses and you have pulled the trigger. ‘Will’ is the simplest and the most effective way of Estate Planning. Even in an unregistered ‘WILL’ there is a legal sanctity. But for a large and complicated Asset base a ‘Trust’ formation can be done.
A little bit of careful planning coupled with foresight can save you and your next generation from tons of Trouble. Don’t forget: Our child’s income is not our annuity.
