Retirement is an inevitable goal of your life. There comes a time when you want to call it quits and just enjoy the fruits of all the hard work you did. Post your retirement, you don’t have to worry about getting up on time and deciding which work you have to do today. Instead, now you decide which destination you want to go and enjoy. Which journey do you want to embark upon?
You finally have ample time to take upon the hobbies you have neglected due to work, or even start a new one. You can finally visit a place that you always wanted to visit, read a book that you didn’t, or just chill and spend some quality time with your grandchildren.
But though now you have time to do all these things, do you have the resources? Another limitation of retiring is that now your corpus cannot change. Are your finances enough that you can enjoy these things? Do you have the right retirement and pension plan? This is a challenge that is faced by everyone.
Here are five important signs that can tell that you are not financially ok to retire.
1. Savings are Low
The basic mantra of leading a good post-retirement life is to save enough that you don’t need to struggle afterwards. But if your savings are not enough that can get you through, then you have to wait a little bit more to finally retire.
The best way to keep track of your retirement savings is to use a retirement calculator every once in a while. The calculator will give you the estimated retirement corpus or the monthly savings amount you need to maintain to achieve your retirement corpus.
Having a good retirement corpus is vital for your life. Savings play a huge role in building your retirement corpus. So you must have a perfect savings plan that makes you enough to lead a stress-free life.
So you should work for some more years. Along with working you should also change your habits and try to save more so that your retirement corpus increases.
2. Lack of Post-Retirement Plan
Retiring without a specific plan in your mind is maybe not the best of ideas. As said above, after retirement you only have a fixed amount of money with you. You need to have a long-term view of whether you can sustain with this corpus or not. You need to know how much money will be enough for you. Though it is not an easy task, doing this will surely help you.
You need to ask yourself some questions such as are your goals fulfilled, are your savings enough that you can stop working? After this, you need to create a proper budget.
The importance of a proper retirement plan cannot be underestimated. To make a successful post-retirement plan, you need to start estimating the income as well as the expenses you may have. Though it is extremely difficult to know what you will be spending your money on after retirement, still having a rough figure in your mind will certainly help you build a basic plan.
3. Are there any Ongoing Loans?
If you have taken any loans and there is still time to pay them off then you may consider these two options:
- Work for some more years till the debt has been paid
- Pay the loan in a lump sum
Paying off loans before retiring will save you the burden that will come with monthly payments still to pay. Paying off all debts before retiring will also help in keeping your long-term finances untouched. As you would not want the monthly payments constantly decreasing the savings you made while that money could have been used for meeting other expenses.
If you don’t want to work more and then you can also pay your loans up-front, provided you have enough money saved with you.
4. Pending Financial Goals you Need to Fulfill
There are a few major financial goals that you would certainly like to achieve in your life. Buying a house, marrying your child off are some of the major goals to look forward to. You would not want to retire before these major goals are fulfilled.
You should also provide for big expenses such as buying a new car or repairing your home in your retirement corpus. If possible try to see these through while you can still work. Thus, it will reduce the amount you plan to use for your daily needs. That is why you should start financial planning and budgeting.
5. High Regular Expenses
Post-retirement income is roughly 50 per cent of your last salary. Having expenses as much as income will pose trouble after retirement. To tackle this the golden rule of managing finances is to be followed. Spend less than you earn. Though it is obvious but very hard to follow.
Two things can be done to manage this situation
a. Lower your daily expensesb. Build your corpus
One example that could certainly curb your expenses is moving to a lower-tier city. Many people move to a different city after retirement to save their costs. Moving to a new city which has lower costs will help you in two ways:
- Lower daily expenses
- Lower homeownership cost vs the present house
Besides if you don’t want to sell then you could let it out for rent and have another source of passive income. Having this kind of income is a huge plus.
Apart from this you can also invest in some good plans for yourself or if can also try investing in the stock market as well.
Retirement without planning is like driving a car without a location in mind, that is, aimless. So, it is very important to have a good financial plan set out that targets a stress-free retirement. Make sure you have a good saving by your side and all your goals are laid out. Look for a good life insurance plan that will not only help you save but will provide you with a good sum of money once you retire.