Retirement can be a stress-free yet the most challenging year of your life. Although you might be free from your work pressure, you might constantly worry about your finances after retirement. Since the unpredictability of life can be high, you might be unable to predict your future expenses.
Before reaching the retirement period, you might plan your finances in advance. During your active working years, you might save enough to ensure that you can fulfil your routine expenses. While you might be unable to predict your future, you can focus on meeting the inevitable expenses of your retirement by investing in a retirement pension plan.
Every retirement period can consist of the following four main types of expenses. Therefore, let’s go through the top four unavoidable expenses in retirement and how you can manage them when the flow of your professional income stops:
- Post-retirement goals
Gone are the days when retirement meant sitting back at home and relaxing. Today, you might aim to fulfil your post-retirement goals, such as exploring new cities, starting a new business, and so on. However, you should have an adequate amount of resources to fulfil your post-retirement goals.
Before retiring, you should identify your post-retirement goals and save money for it accordingly. For instance, if you plan to travel after retirement, you should park funds in investment tools for the growth of your money by the time you retire. According to a report, a majority of the Indian population is retiring early to travel the world and live a high-quality life after retirement.
- Medical expenses
Many of you might choose to retire at the usual retirement age, which is between 55-60 years, while the rest of you can aspire to retire early between 45-50 years. Whether you plan to retire sooner or later, medical expenses can be an inevitable part of your life after retirement.
Medical expenses are increasing rapidly due to the growing rate of inflation. According to a data report, it has significantly risen from 4.39% to 7.14% in the current fiscal year. Due to growing medical expenses, you might tend to ignore your treatments after retirement since the flow of your professional income. Under such a scenario, you should purchase a health plan to provide financial assistance during a medical contingency like critical illness, physical disability, and so on. However, see to it that you buy health insurance at a young age to pay a low premium due to fewer health conditions.
After you start earning, you might not be able to avoid the payment of taxes even if it is a complex procedure. Tax payment is one of the most crucial part of your life even after retirement. Although your tax liability can reduce, you would still be eligible to pay your taxes regularly after retiring.
Today, you can select from a host of tools such as pension plans, annuity plans, etc. to reduce your tax burden after retirement. Such options can not only provide you with retirement income to meet your needs but also offer tax benefits. Typically, you should select those plans that are available under Section 80C, 80CCC, and Section 80CCD.
- Routine needs
The routine needs are typically your daily financial necessities to meet your household expenses. Your household expenses can include everything right from your rent payment to utility fees such as electricity, gas, and so forth. However, household expenses can depend on your standard of living. For instance, if you live an extravagant life, your household expenses can automatically increase.
To meet your routine expenses, you should maintain a balance between your savings and investments. While savings can be crucial, investing can be an imperative part of your retirement planning. The right retirement investment plan can allow you to lead a comfortable life after retirement. Typically, you should look for plans that can offer retirement income on a monthly basis to help you fulfil your household requirements.
To sum up, a well-thought financial plan can be a combination of your retirement savings and investments. It can ensure that you lead a peaceful retirement period without any financial constraints. While planning for your retirement, you should keep a track on your expenses, build an emergency fund, and check your investment performance.