As you are nearing your retirement age, you may need to make some changes to your habits and living standards for various reasons. The same is true for your money as well. Therefore, it is always wise to draw a clear roadmap to make money work for you from an early stage.
1. Curtail Your Expenses
The most common yet essential exercise of managing money after retirement is to curtail your expenses. Unfortunately, people often misunderstand this with lowering the living standards. Nothing can be further from the truth.
During the regular inflow of salary, it is natural to accumulate some unnecessary spending habits. For example, frequent shopping trips, buying and storing non-essential items, etc., can be some examples of unnecessary expenses.
You need to write down all such expenses in one place and analyse which one of them is important. After that, you may go on to curtail unnecessary expenses and make it a healthy financial habit. You should start doing this exercise even if you don’t feel any need of budgeting right now.
2. Keep Paying Your Health Insurance Premium
By paying Rs 10,000 toward your health insurance premium each year, you might save several lakhs in future in the form of medical emergencies that may comprise hospitalisation and nursing care. Therefore, keep your health insurance active.
3. Consider Buying Pension Plans
Buying an immediate annuity plan can help you in getting a fixed monthly income for your entire life. You can also choose the option where your spouse can also keep getting the pension after your demise. Therefore, annuity plans can give you the much-needed financial cushion that insulates you from falling bank interest rates.
4. Don’t Stop Re-Investing
Don’t become complacent on your retirement corpus. Inflation can silently eat into your savings. Inflation of 5.2 % in a year means the value of your Rs 100 becomes Rs 95 after a year without spending a dime. Therefore, always keep re-investing a portion of your retirement corpus in various investment options.
You may consider investing in a moderate risk mutual fund where a significant portion of your investment is invested in debts, and a small portion is given exposure to equities.
5. Don’t Keep Too Much Money in Savings Accounts
The interest rates in savings accounts are low compared to other options where you can park your savings securely. So, refrain from parking your entire retirement fund into a savings account. Instead, use the savings account as emergency storage for the fund and park most of the savings in different risk-free instruments such as senior citizens fixed deposit schemes, gold bonds, etc.
Retirement does not have to mean pondering over your savings all the time. It is the onset of the second inning where you can consider working on your hobbies and interests and stay active. So leave your liquidity worries behind with smart money management strategies as discussed herein and get ready to live your retired life to the fullest.
