Financial Planning Guide - 35 to 60 Years

Choose the right job
If you want to earn more, don’t choose a job that pays more but one that helps you create wealth. Such a job gives you access to wealth creation tools and benefits like company loans, stock options and decent retirement packages. Look for a company that provides you provident fund, gratuity and superannuation benefits.

Get adequate insurance
When you are trying to make up for the lost years, you cannot take as much risk as others. Insure yourself against unforeseen events like death, disability, disease, and loss of/damage to your assets like car, house and other valuables. Make a realistic assessment of the risks you face and then opt for low-premium policies with high-risk cover to avoid high regular obligations.

Take a loan
After risk coverage, your next priority should be asset acquisition to space out your cash outflows. Most goals like buying a house, children’s higher education and marriage, and retirement have to be reached in a short span of time. It is better to take a loan to achieve these goals as paying in EMIs is far better than facing huge payouts close to or after retirement.

Invest as per your risk-appetite
Draw up a priority list of goals in terms of proximity. Equity funds and equities are attractive options for goals in the 5 to10 year range.To boost your wealth growth, invest in incremental savings like interest, dividends, bonus and windfalls into growth investments like equity funds and equities. But remember, the nearer the goal, the lesser the risk you should take.

Fix your retirement age
Now is the time to decide your retirement age and evaluate if you have enough retirement funds to support it. If not, you may need to plan for your post-retirement job, which could be from a part-time job to consultancy or advisory services.

Decide your location
With age housing requirements change. Don’t make the common mistake of postponing this decision because it will eat into your savings; plan 10 years ahead at least. If you’ve decided to relocate or buy a new house and need to take a home loan, ensure that it can be repaid before retirement. By this, you make certain that your retirement period will be stress-free.

Enhance liquidity
A decade before you retire, start reducing your investment risks and increasing liquidity options to meet costly expenses and emergencies like lifestyle and other diseases. Park an adequate portion of your funds in FDs, liquid funds or Systematic Withdrawal Plan (SWP) to get easy accessibility to your wealth.

Ensure tax-efficiency
Minimise tax outgo by creating an ‘income ladder’ so that your investments mature over 4-5 years after retirement. Then re-invest in the same instruments to create perpetual annuities. Tax planning would also depend on your risk profile. If you have a comfortable retirement corpus, invest in debt funds that provide capital gains, taxed at 10% instead of 30% or consider SWPs for regular cash flows.

Explore second careers
If you want to pursue a second career, use your professional network to tap the ‘invisible job market’ a year ahead of your retirement age. Once your finances are in place, you can indulge in your favourite pastime during retirement, be it reading, painting, playing golf or travelling.