Nearing Retirement? It's time to plan!

If you are less than 10 years or even closer to your retirement, it is time to plan for a smooth transition to ensure a financially worry-free second innings of your life.

Here’s what you can do:

Take stock of your financial health: Start by assessing your investments, assets, and liabilities. Do you have any debt? Do you have sufficient medical insurance for you and your family? Consider any future financial obligations like children’s higher studies.

Retirement Corpus: Use a goal planner to determine the retirement corpus you would need to manage your monthly expenses and sustain your current lifestyle. Factors such as estimated life span, inflation, and potential emergencies over the later years are used to arrive at the retirement corpus needed.

If you have saved less than what’s needed for your retirement goals, start saving aggressively now. Curtail unnecessary spending to save more. Based on the number of years left for your retirement, you may consider investing in a retirement fund.

Try repaying your debt: It may be ideal to repay your EMIs before retirement so your investments do not suffer.

Optimize and diversify your portfolio: Keep track of your portfolio. You may think of consolidating your portfolio by diluting investments that are not performing as expected and investing in funds with growth potential. It would be smart to diversify your investment among different asset classes such as gold, real estate, equity, and debt. Balance risk and reward as per your risk appetite, investment horizon, and financial situation.

Balance your investment portfolio: As retirement approaches, your risk appetite tends to decrease. If you are invested in mutual funds, you may consider to gradually shift your investments from equity to low-risk debt funds when you are three to four years away from retirement. You may want to shift your retirement corpus to options with high liquidity. Inflation can throw your financial planning off balance. It would be smart to keep some investment options open to take care of inflation as well.

Tax planning: Tax planning on your investment is a crucial factor in financial planning for retirement.

Life does not stop at retirement. Start planning now for a happy, worry-free retired life.
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* Investors should consult their financial advisers if in doubt about whether the product is suitable for them. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The material is prepared for general communication and should not be treated as research report. The data used in this material is obtained by Axis AMC from the sources which it considers reliable.

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