People who are planning their retirement (that means all of us including those who are retired) must ask themselves a few questions…let me enumerate a few:
- Is your retirement by choice or by force? If you are an employee the chances are that you will be forced to retire at the retirement age – which could vary from 55 for an army professional to 68 for a professor / Judge of the court. If yours is by force will you take up another job? Paying just as much or much much lower – but will keep you busy. What about your ego to keep a much lower job?
- How long will you live? – No this is not a question that you can answer..but if you are optimistic plan for 83 and if you are realistic plan for 93. Many of you who are reading this post are likely to cross 100. See around you and you will find that this is not an empty threat!! Get prepared for a real long innings.
- How much income are you really going to have, and how much are you going to spend? There are calculators around – go and use them. Your current income (salary?) is of course no indicator of what your post retirement income will be. Sit down and calculate as accurately as possible. Try projecting for about 5 years at a time. It is almost impossible to be accurate for period crossing this figure. Be careful about your estimate, and remember the more conservative you are, the better.
- Will you be able to sell your business? Businessmen who do not have children / have children who are not interested in their business tell me ‘we will sell our business’ – remember this is not a one day process like retiring from a job. It can take an inordinately long time and if the buyer is not your employee or partner it could take many rounds of negotiations. So it has to be fast, practical, and time bound a program. See how to handle it.
- Do you have the best asset mix needed in retirement: Your asset mix should keep changing even in retirement. The portfolio of a 88 year old will look very different from that of a 78 year old. The portfolio of a person impacted by alzheimer / parkinsons could be different from a person who can handle the portfolio himself / herself. Do you know who is going to help you in your later years for managing your money? Better to start looking for such a person when you are about 65 years of age.
- If there is an Income gap what will you do? Or at what age will you withdraw from your capital? Some people are comfortable withdrawing from their capital at 72. Some are comfortable withdrawing only at 82. Take your pick, however, apply thought.
- How much will you help your children financially and physically? At what stage will you want to live with them depending on them physically / financially? If at all? Will you do a Reverse Mortgage with a nephew/ niece asking them to live with you and in lieu of the looking after give them your house? Remember senior citizen abuse is damn damn scary. Caveat.
- How do you think will inflation impact you?
- Are you willing to sit down and make a Retirement Plan, now? – this perhaps is one of the toughest questions to answer.
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