From the age of 50 or thereabouts you need to be planning for retirement. Typically you may be planning to retire at 52-65 depending on many factors of your life..here are a few things you need to take care of:
a. Communicate with your spouse: If you think you will retire at 55 and your wife will retire at 60, check up with HER. Even if she had said so 10 years earlier, things may have changed. She may want to quit her job if she thinks she wants to help her daughter/ daughter-in-law with the bringing up of a child. When you are not sure, ask. Communication will surely help.
b. Be ready for the unexpected: an older relatives heart treatment, parents needing medical/ other financial help, a child/sibling having huge financial problems might require intervention. Saying ‘such things have not happened to me’ is stupid, and completely believing on luck. Be ready.
c. Be ready for medical emergencies: A fire accident can set you back by Rs. 2 million before you even realise it. If you have a medical insurance for Rs. 5 lakhs, the remaining Rs. 15 lakhs will go out of your kitty. Cancer at least you have a choice – and can say I do not want that treated, for a fire accident that choice is not available.
d. Buying some big ticket item – Electronic, vacation,…just be careful. A bad equity market with a 10 year poor run can unnerve you. Withdrawing during a poor run can hurt your portfolio real real bad. You need to be careful of such things.
e. Hoping to live only on the income: Many people think that they need not touch the principal – the dividends and interest alone will take them through. However, it is all right to dip into your capital at the age of say 75 years – assuming that you live to age 84. However, like A K Hangal if you live till the age of 98 years, chances are that your portfolio will be exhausted by then – and if you do not have kids / nephews (I know such people, it is not rare), pray that you have long living friends who are at least 20 years your junior!
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