REFIRE YOUR RETIREMENT : ZINDAGI NA MILEGI DOBARA

CASE STUDY 8

Client Profile

Client: Retiree or about to retire

Situation: Redefining Retirement Goals at 50/60, setting new goal at 50/60, creating/realigning a financial portfolio,

After years and decades of hard work and long hours, it is time to hang up your boots and hat and retire. Well, you have been waiting for this inning, dreaming of this moment for as long as you can remember but finally when the golden moment arrives, you can’t help but wonder what your life is going to be like after retirement. Those coveted golden years that you longed for are finally at your doorway and you are suddenly skeptical about embracing them. You are suddenly very bitter and surly about the new phase.

In an ideal world retirees would enter their twilight years with all the wealth they needed to spend the rest of their life in comfort and peace. An ideal retired couple would always be financially secure without any apprehensions of outliving their retirement savings. But that’s a very utopian idea, isn’t it! Actually, retirement is a veritable change, ‘a rite of passage’ that entails a change in your identity and in your previous schedule as well. Mostly, the end result is that your long-awaited life of leisure can turn into one of languor and regret.

The idea of writing this article is not to disappoint you or discourage you but to make you aware of all the possibilities that mutual fund investments have to offer in order to make your retired life more comfortable and less worrisome. Our clients, those who belong to this particular age bracket (retired or about to retire) have benefitted immensely by investing through mutual funds . Our financial experts plan and design the entire corpus very diligently in order to map their investment with their existing or new goals. It is important to mention that you can start investing at any age. Anytime is a good time.

One must keep it in mind that wealth building does not end with retirement. One is never too old to build wealth. Financial markets are always evolving, so committing to staying informed will ensure that you know when it is time to review your strategy or explore new opportunities. This is where you need the expertise of professionals as you may not be well versed with the nuances of efficient investing. Personal portfolio management and creation will require risk assessment , understanding your spending habit, assessing your existing household expenditures, paying off debts if any, identifying new goals, planning for elderly care and the like. This entire process is reviewed and updated at regular intervals for the existing clients as per their convenience. For those who are looking forward to being part of our Investaffairs family, we ask them to fill out the datasheets, and based on the details provided we proceed with the onboarding process.

Most retired people are petrified of the volatility or fluctuations in returns of the mutual funds and prefer to stay away from them. There is a provision called SWP in mutual funds which helps in earning a regular monthly income. Those who have started early and have followed certain rules like the 25X rule (saving 25 times your annual expenses before retiring), or rules similar to this, or consciously practiced setting aside predetermined amount (reverse budgeting) for savings before spending on anything else have generally encountered less issues while realigning their portfolio during or after retirement. Those who are fortunate enough to draw a huge salary or have started early, can afford to invest more modestly and still have enough wealth to retire as per their wish. Others can, however, use a more aggressive portfolio to reach their goal.

Furthermore, it is interesting to note that some of our clients, with a decent corpus and mostly in their early or late forties, intend to retire by fifty or fifty-five and they are working towards that with our help and guidance. Discussions around these topics always precipitate down to a single common factor- apprehensions of an early burnout. However, there is one problem with retiring early (in your 50’s). If you do not have enough corpus to sustain yourself for, say 30 or 35 additional years assuming the fickleness of our economy, you may have to tackle challenges. Many people associate retirement with the joys of putting work stress behind and having more time to pursue their interests. But life, as we know, is unpredictable and here we are talking about a very long haul. So, whether it’s 50 or 60 or any age for that matter, retirement needs to be taken care of by allocating for both the obvious and unexpected.

It would be helpful if we break down the entire process into various steps for better understanding:

Step 1 - Understand and learn to balance the income and living expenses (I>E). prepare an extensive list and adjust your income and expenses in order to balance the formula.

Step 2 - Your investments and cashflow will be adjusted in a manner that will generate a stream of retirement income to last you the rest of your life.

Step 3 - Whether you want to work after retirement or not is completely your call. Although for some people retirement may mean to be working much less or working part time to supplement their financial resources. It is always wise to try to find work that you will enjoy and gives you satisfaction and covers your daily expenses. Also, with age catching up commuting long distance may act as a hindrance, so find something closer to house for convenience.

Step 4 - Even though you are retired you may still be burdened with provisioning for higher education (college or university), elderly care for your parents, dependent children, repair and maintenance of your house, health care etc. In such situations if your cash flow from all the sources is insufficient to cover those current and future expenses, you will need to reduce your spending.

Step 5 - Once you have guesstimated your expenditures based on Step 4, you will need to revamp your portfolio with the help of our experts and work towards protecting your capital while maintaining a lifestyle imbued with luxury and comfort that you are used to and not compromising on your dreams.

This is not called the golden phase for no reason. Retirement marks the end of your working life but most importantly it marks the beginning of a new phase whereby retirees can pursue their interests, spend time with family and friends and enjoy leisure activities. To make it more beautiful- forgive, forget, invest and move on.

SWP - SWP or systematic withdrawal plan is a mutual fund investment plan, through which investors can withdraw fixed amounts at regular intervals, for example – monthly/ quarterly/ yearly from the investment they have made in any mutual fund scheme.

CONCLUSION: Retirement is a golden phase that marks the beginning of new opportunities to pursue interests, spend time with loved ones, and enjoy leisure activities. By forgiving, forgetting, investing, and moving forward, you can make this chapter truly fulfilling.