Packing batteries with more punch
Indian researchers are working on cells that can store more energy, last longer
Most folks have a clear picture of what they plan to do after retirement — sleep late, catch up on Hollywood flicks, travel, spend time with the children. But to get to that utopian state after retirement, you need to put in some groundwork in the run up to it. Assuming you’ve been investing towards retirement, here are five things you need to do three years before the D-day.
When you start investing towards retirement in your 20s or 30s, you make a whole lot of assumptions about your income growth, savings, returns, inflation and living expenses after retirement. But real life seldom mirrors excel spreadsheets. That’s why three years before retirement is a good time to take stock of your likely retirement corpus.
To do this, add up your accumulated balances in EPF, PPF and NPS, the market value of your equity and mutual fund holdings, sums in small-savings schemes, banks or other vehicles, and any significant investments in real estate or gold. Exclude the value of the house you occupy and the money you need towards specific goals such as your children’s post-graduate education. Deduct outstanding loans. What you are left with is the sum you’ll have to rely on for your income, post-retirement. By now, you will also have a good idea of the money you’ll need to meet your living expenses. If you can meet them by withdrawing just 3-4 per cent of your corpus, you’re well-placed to retire.
If your invested corpus looks as if it will fall short of your needs, supplement it by unlocking value from neglected assets and squeeze out a higher return from your existing savings. You may have bought a plot in the early years of your career; consider selling it to raise cash. If you have unused jewellery and silver lying in your bank locker, consider liquidating them. Instead of letting money idle in savings accounts, set up a sweep to plough it into fixed deposits.
The investment vehicles that you use to earn income, post-retirement, need to be very different from the ones you used to accumulate the corpus. Three essential attributes for your post-retirement investments are capital protection, regular income and liquidity. This may call for a portfolio re-jig. But initiate this process well ahead. Exiting your equity investments in a phased manner well ahead of retirement will ensure that your entire corpus isn’t exposed to a market fall at the eleventh hour. Depending on your risk appetite and return needs, you can opt for different mixes of equity and debt (30 per cent equity and 70 debt, or 20 per cent equity and 80 per cent debt).
Liquidity and ease of monitoring will be important to you after retirement. So, if a good part of your net worth is invested in real estate, land or gold, it is best to initiate their sale three years ahead so that you can switch to financial assets. If you are planning to rely on mutual funds with equity components for regular income, the investment must be made 3-5 years before retiring.
For stress-free retirement, it is best to start off with a clean slate on liabilities. Loans and EMIs also rob you of flexibility, post-retirement, as you will be forced to sacrifice a part of your income towards the repayments. Therefore, it’s a good idea to repay all your liabilities before you retire.
Use your accumulated savings to repay outstanding loans ahead of retirement. If you have limited money at your disposal, repay your high-cost loans first, such as credit-card debt and personal loans. Your car and housing loans can follow.
Two kinds of risks that can totally upend your financial life after retirement are medical emergencies and natural disasters. Therefore, folks who have been used to a liberal health insurance cover from their employers during their working years, need to buy a comprehensive health insurance plan of their own before they retire. Doing this a few years before retirement makes sense because the younger you are, the cheaper your health insurance premium and the more options you get to choose from.
Most health insurance plans insist on a waiting period of three years or more before they begin to cover pre-existing diseases.
If your family members or parents were covered by your employer, you may need to take care of that cover, too, before you retire. Property insurance is another form of protection that it is quite useful to get before retirement. During the Chennai floods a few years ago, many retired folks had to replace most of their belongings at one go after their homes were ravaged by the natural disaster.
Indian researchers are working on cells that can store more energy, last longer
To fix a broken bone, doctors often harvest another bone from the patient’s body or from someone else. It ...
Superconductors from IIScScientists at IISc Bangalore have invented a device with a nanocrystal structure ...
Engineering and construction giant L&T has won a licence from the Council of Scientific & Industrial ...
Option price falls more than it rises for the same change in underlying
A long-term vacation here is worth a check-in
The fund delivered a return of 31.5% in 2020 compared with the category’s 15.5%
Care Health Insurance’s new rider offers no great benefit. We review its pros and cons
In these isolated times when people yearn for a slice of the familiar, amateur and professional chefs are ...
While good writing wars against the cliché, television gives it a natural home
India is ready with two vaccines to beat the deadliest virus of recent times. The immunisation drive, however, ...
The storming of the Capitol on January 6 could be the prelude to yet another chapter in the US’s long and ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor