How can you Plan your Post-Retirement Income More Efficiently

by Aman Khanna Finance

Organising your post-retirement income can help you finance your future, as well as your family’s, more conveniently. Be it healthcare or daily living expenses, be it gifting your grandchildren or travelling to see your family and friends, you can take care of all costs without a hassle by following these investment tips.

Make Investments that Beat Inflation

Ensure that your investments beat inflation so that the value of your money appreciates, rather than staying constant or falling lower. Usually such schemes carry some amount of risk. Here are a few options you can consider:

Mutual Funds: These are securities issued by companies listed on the stock market. They offer substantial returns, but these returns aren’t exempt from taxation unless you invest in certain specific tax-saving funds like ELSS. Mutual funds give good long-term returns, and should be a part of your portfolio.

Real Estate: This involves investing in property and selling it or letting it out when the price appreciates. This investment promises high returns, but the success depends on the how the real estate market is performing.

Gold or Gold Funds: You can also consider investing in physical gold or a gold fund, which includes tools such as gold ETFs. Typically, investing in gold is viewed as a hedge against inflation and offers high returns. It is also a highly liquid option and lets you meet urgent needs in a timely manner.

Prepare for the Unexpected

Life Insurance: Life insurance is a practical way to provide for your family. You can consider choosing a policy that has maturity benefits, which will give you a sum of money after the policy lapses.

Health Insurance: Medical treatment can be prohibitively expensive, especially as you grow older. A health insurance policy helps reduce these costs by giving you a health cover. Choose a policy that covers accidents, room costs, consults and pre- and post-hospitalisation expenses. This helps reduce your out-of-pocket expenditure on healthcare.

Make Investments that offer Regular Payouts

After retirement, you won’t have a regular source of income in the form of a monthly pay check. So, consider investments that offer regular income like fixed deposits. This is a convenient and safe option for you post retirement, as it is not linked to market forces Moreover, it gives you payouts on a monthly, quarterly or semi-annual basis when you choose a non-cumulative FD.

This can help you replace your monthly salary. Besides, FD offer senior citizens a higher rate of interest to the tune of about 8.10%. With a flexible tenor to boot, this is a far better option for you to park your funds as opposed to a savings account. You can also use your PPF or EPF money to invest in fixed deposits. This is a good way to multiply your wealth. Choose the Fixed Deposit for better flexibility, liquidity, higher rate of interest and nominal investment amount. Other options for monthly earnings include:

Senior Citizens Saving Scheme: This option is customised to suit the financial requirements of senior citizens. It lets you invest a sum of money for a period of 5 years that can be extended for an additional tenor of up to 3 years. It offers you a rate of return of up to 8.4% per annum. So, if you want to opt for a mid-term investment, this scheme is a great fit.

Post Office Monthly Income Scheme: You can invest up to Rs.4.5 lakh in this account, with an interest rate of 7.5% and receive monthly payouts. While this is a government-backed option and so, is secure, the interest earned from it is taxable.

Limit your Debts

When you retire, refrain from borrowing debt. Even if you do, ensure that you do borrow smartly. Avoid borrowing several loans at one go. This can put your assets at risk and cause you to lose out on a huge portion of your income from investments. Limiting your debts will help you retain the income that you would otherwise use to pay expensive EMIs.

Focussing on these four areas will help you plan your post retirement income in a way that beats inflation and gives you regular income while factoring in unexpected expenses and secure your retirement life.