How to manage Your Finances Post Retirement?

People have different thoughts about life after retirement -

Mr. Joshi wants to live a life farming in his home town where he has built a villa for himself.

Ms. Vrinda wants to follow her passion for travelling and plans to travel with her friends all around the country.

Mr and Mrs. Shah want to spend maximum time with their children and grandchildren in the US.

Many do not think very seriously about finances post retirement. Some do worry about it but do not plan properly for it.

You need to ask yourself as to how much money you would need post retirement and if your investments and income (if any) would take care of your expenses. Do you know how much money you need during your retirement? Have you planned for retirement? Do you have a diversified investment portfolio?

You will have some savings and investments. You might have an income stream too. Let us look at ways and means to maintain income streams and make money work hard for you -

Health is Wealth – One should maintain good health by following a healthy lifestyle. Some exercise and a controlled diet is definitely important. It is important to maintain mental and emotional fitness too. Find activities that interest you be it crosswords or walking in the park and communicate with near and dear ones regularly. This will help in reducing medical expenditure or postponing it as much as possible.

It is important to have health insurance too. Medical treatments are frightfully expensive and as one grows older, ailments grow in number. Health insurance keeps financial stress at bay in trying times.

Plan post retirement activities – It is good to decide what you want to do during the retirement years and plan for it. If you plan to go back to your home town, make sure you have proper arrangements for living there. Make sure your health will not get affected by the weather or lifestyle there.  You will have a lot of time in your hands post retirement. If you do not plan for activities, you might get bored and disillusioned. Make a plan of what you want to do post retirement – pursue a hobby, teach something or devote time for social work.

Save and Invest – You should continue saving and investing so that you can maximize the potential of your wealth. The asset allocation should be tweaked as per age and financial circumstances. If investing in equity mutual funds, select ones that have investments in large solid companies. Go for balanced funds where the exposure to equity and debt is balanced appropriately. As you grow older, the exposure to equity should reduce. The returns from investments should be further invested to beat inflation and earn more.

Management of Income and Expenses  - Draft a budget and follow it. Keep a track of your expenses. In the initial years of retirement, the expenses will be higher as you will be more active. But later on, medical expenses might rise. So do not spend more than you can afford. If there is a slump in the economy, the investments might not earn as much as expected. Therefore you should manage your lifestyle accordingly.

If you have a financially secure retired life, your retirement years will be truly golden. You can have an enjoyable life if your finances are taken care of.