A retired person’s biggest concern is managing his money. He may have no regular income barring what accrues from his investments. Assuming that your pension plan is in place, let’s take a look at the other money moves you should make before your retirement.
Invest your savings
Make sure you have enough money locked up in investments so that they continue paying you till the end of your life. If not, invest the largest part of your current income in order to strengthen your financial position after retirement. To help you in this regard, you will also earn a final settlement from your employer as well as a gratuity.
Settle your debts
Unless you have an impressive pension plan and an ample retirement corpus, it would be a bad idea to carry your debts into retirement. A good retirement plan should include a debt-settlement strategy. You should aim to settle your debts while you’re still working, starting with debts with the highest interest rates such as credit card bills and personal loans. This would allow you to enjoy the maximum value of your full and final settlement from your employer.
Maintain emergency fund
As you age, it is probable that you will have health issues or even an occasional financial crunch in the absence of a regular income. You should start building an emergency fund while you are still working, using debt instruments that provide safety of capital and liquidity.
Check your insurance
In old age, one will face health issues and rising medical costs. Any small medical problem can deplete your post-retirement finances. Invest in a good medical insurance plan well before your retirement so that you are covered for any untoward medical expense after your active earning years. Even if you started retirement planning early in life, revisit your insurance plans periodically and tweak them as per the best available choices for your future medical needs.
Invest in senior citizen plans
One of the advantages of being above 60 is the interest rates in various small saving schemes. Once you cross the threshold of 60, you can liquidate existing instruments to avail senior citizen schemes and earn higher interest rates.
Create revenue streams
You may think your retirement corpus is sufficient for your future needs but you have to contend with inflation. Establish a source of regular or semi-regular income. Based on your skill set, experience, health condition, and desire to work, you could take on not-too-taxing roles in consulting or coaching.
The writer is CEO, BankBazaar.com