How Much Would You Require Post Retirement?

Factors That Determine The Corpus You Need Post Retirement
Take Away

The first step in choosing the appropriate pension or retirement plan for you is analyzing your post retirement goals and how much funds you will require for that. Everyone has their different set of priorities, someone might have to set a corpus for their children’s education or marriage, their health care or emergency matters etc. Hence, to secure a stable future, you need to make an estimate of how much you would require post retirement.

The main trick that comes here is how to determine the corpus you will require after your retirement because needs keep changing according to the time and situation and to predict an estimate might not be that easy but there are many factors that can help you decide this so you can determine an estimate which will not only cover your basic expenses but emergency events as well.

Factors That Determine The Corpus You Need Post Retirement

After retirement, the pension should be capable of accommodating the basic living expenses each month. The extent of present spending can be used to estimate future expenses. Housing costs, utility bills (such as water, electricity, and fuel), food and clothing prices, transportation, and other miscellaneous expenses that may arise after retirement should all be factored into the calculation.

Inflation Rates During Your Retirement

Inflation will set in over time, making goods and services more expensive and boosting the cost of living each year. India's current inflation rate is around 4%, and it will continue to climb year after year. The pension pay-out should increase in line with inflation. Meanwhile, the money you receive will not be enough to cover your needs, causing you to seek financial assistance when you are no longer working.

Determine Your Medical Requirements

Old age brings with it a plethora of potential health hazards, you might be very fit but might have to get admitted one day, it can be due to any reason. One should be mentally and financially prepared for it. Your pension plan should cover basic medical expenses such as emergency hospitalization, health insurance, cashless operation facility etc.

The Status Of Your Debts And Loans

Many people are under different types of debts and loans and sometimes by the time they retire, they are not able to clear it off. You too might be one of them, so it is quite clear a significant part of your income, what so ever that would be coming from the pension will have to go for the debts and loans therefore in that case, it is recommended that you should choose a plan which provides a corpus that you can easily enjoy after paying your loans.

Analyse Your Savings And Investments

It is quite probable that being an employee you must be having a social security deposit if not other investments such as mutual funds, money back plans, endowments etc. All these amounts are saved for your post retirement needs only and you should analyse how you will use them in the long term and if they are enough for your long term goals. Depending on the corpus you have from savings and investments, you can make an estimate.

Analyze Your Side Hustles Carefully

Many people never stop working because they have this psychological belief that after superannuation, if they sit idle, it will make them lazy, prone to illnesses and boredom etc. which can’t be claimed true or false as it depends from person to person but the matter of fact here is having a side hustle. Many people establish a company or a small side job as soon as they retire. This not only ensures that they stay engaged but also brings with it monthly remuneration, if you have one, you can manage your expenses well and have a balanced pension requirement.

Take Away

To conclude, planning and preparing is the key to everything and it gets more important when you have to plan for your future post retirement. If you start saving early, you will have a good corpus in the long term and you will be able to meet all the finance requirements that come along.