How to be financially independent after retirement
Retirement can be a boon or a bane, depending directly to how you plan for it. If you have planned well, then you can surely do what you missed in your working life like travelling, painting, writing, photography etc.
To be able to enjoy one's retirement one needs to plan in advance and be disciplined. A few tips for being financially independent”
1. Plan early, mostly people start looking at retirement in their 40’s. Nobody takes retirement seriously but sooner the better should be the maxim to get the power of compounding working for you. Plan with annuity (insurance) plans, long term value investing in Mutual Funds, if you are the risk taker then Equities that have a fundamental story to it. Your retirement kitty cannot be made of punts that you like to take, keep that outside this kitty.
2. Be independent and not depend on children – New age parents would prefer to go by this mantra rather then plan their retirements thinking kids will take care. Retirement should be ones top priority so that you keep not only your financial independence but emotional and intellectual independence
3. Create a Retirement Plan
a. Base your plan on your requirements and your lifestyle, thumb rule you need at least 2/3rd of your pre-retirement income to maintain your standard of living when you stop working.
b. Your investment strategy should be dependent on your risk appetite, so that your plans don’t get shortchanged
c. Diversify, don’t put all eggs in one basket. Have a healthy mix of capital appreciation and fixed returns
4. Understand your pension plan – If you get a decent pension plan then most of your planning is done assuming you meet the requirements as per point 3, if not then understand the gaps and plan for the balance. With retirement plans your money grows in a tax efficient manner and compounding interest over time makes it one of the best investment options.
