The idea of retirement comes with a break from the usual monotony of one’s commitments, especially at the workplace. While some talk about fleeing to the mountains and practising spirituality post-retirement, others find ways and means to strengthen their existence socially and financially.
The key idea is to create effective retirement plans to undertake new obligations while leading a stress-free life. Continue reading below to know what to do after retirement in India.
Why Do You Need a Retirement Plan?
Before looking for things to do post-retirement, question yourself about how you define an after-retirement life. Your answer must have a definite sense of purpose and should be financially viable and also practically achievable. Once determined, you must make an initial plan that keeps your saved capital safe without compromising your living standards. Your plan should look at life from a broader perspective that helps leave a legacy and be potent enough to fight inflation, any other financial crisis and unexpected situations like the COVID-19 pandemic.
Chalking up an effective retirement plan is proportional to timing your retirement correctly. The earlier you begin your retirement planning, the greater the chances of accumulating substantial savings. However, this accumulation also depends on when you plan to retire.
By starting at the age of 20 and ending at 60, you have 40 years to accumulate your desired capital to be enjoyed after retirement. However, if you retire earlier (say 45 or 50), you have 25 to 30 years to grow the same capital at a constant growth rate of money. So, instead of planning your retirement corpus in your late 30s or 40s, make sure that you plan according to your desired living standard post-retirement.
Experts believe that practising financial discipline helps protect against your post-retirement financial problems. Irrespective of your post-retirement commitments, you must be able to identify potential income sources, own appreciating assets and lessen your financial liabilities. Although this does not imply cutting expenditures for more savings, it suggests that you must judge the legitimacy of your financial outflows.
Also Read: Here’s How You Can Retire Rich in India
11 Things to Do After Retirement in India
Planning for retirement is a multi-step process whereby a retiree maintains a balance between comfort and financial security. Raising money to fund your future is not enough; making it grow completes the process. Here are the 11 things you can do in your post-retirement days in India:
1. Fulfil your unattended wishes:
An ideal post-retirement stage gives you the freedom to pursue your hobbies like completing your bucket list or being involved in creative or consulting jobs. Instead of regretting something that you should have opted for earlier, try to forge a new path post-retirement.
You can have a great travel experience with your family or reveal your entrepreneurial spirit right after you retire. Research shows that most retirees wish to opt for new ventures based on their passion and experience. Consider making subtle changes in lifestyle that allows undertaking newer projects.
2. Consider a shift in your location:
To break free from the routine monotony of life, many retirees consider shifting to a quieter and better location from where they are currently residing. While some retirees resort to permanently settling in an isolated location for a more vibrant perspective, others choose to relocate seasonally. Years of living in a hustling metro city take the toll on one’s patience and desire to contemplate life.
If your retirement corpus permits, you may purchase a vacation home. There are numerous seasonal jobs that can finance your sabbaticals and housing choices. In addition, you can consider taking a government job for retirees with managerial or consulting roles.
Also Read: How To Retire Sooner and Richer?
3. Maintain a strict routine:
Physical and mental fitness are crucial prerequisites for a happier retirement. Apart from physical ailments like heart disease or diabetes, many retirees suffer from severe depression right after they retire. Instead of treating post-retirement as a point of no return, consider following a strict routine with timely meals and enough time for exercise.
Consider adjusting your idea of retirement in case of emergencies. A strict routine does not imply changing your lifestyle completely. Doctors recommend senior citizens to keep themselves away from intoxicants like alcohol or smoking.
4. Free yourself from financial liabilities:
Post-retirement is the time to free yourself from things like debts and spending more than your earnings. Unfortunately, research shows that 67% of working professionals enter their retirement phase without savings, while more than 25% cannot afford to retire completely.
Aggressive savings can partially solve this problem of financial liabilities. Some retirees claim to have saved more than 60% of their pre-retirement salaries to afford the same living standard. Consequently, many retirees use fixed assets like apartments or office spaces to generate a constant income. Depending on valuation, you can reverse mortgage your house for regular income.
Also Read: Step-By-Step Guide to Efficient Retirement Planning
5. Include your family in all financial decisions:
Before making large financial purchases, consider consulting your family and their contribution to the liability. You should avoid spending more than what can be generated. Conversely, ensure to discuss your financial goals after retirement. Also, make sure that your family is included in a health insurance program.
You may even consider encouraging your children to make small investments in low to moderate-risk assets. Financial advisors suggest conversations on estimation and monitoring funds instead of mentioning the potential threats alone. Authority and autocracy in financial decisions can lead to disappointment and unplanned expenditure within a family.
6. Prepare for emergencies:
In addition to financial investments that generate monthly income, it is advisable to pursue an emergency fund. After 60, the probability of falling ill and facing medical emergencies is very high. Moreover, a post-retirement life is unthinkable without a good contingency fund.
Although your location, pre-existing health condition or nature of medical emergency primarily determines your emergency fund, experts recommend maintaining 6-8 times your monthly expenditure. A survey revealed that 47% of working professionals in India are not saving up for retirement nor keeping a contingency fund. Withdrawing a large amount from your retirement corpus can pose a serious financial problem.
7. Utilise your leisure hours:
The gradual transition from your professional career to life after retirement leaves most retirees with time to pursue their desires. Instead of regretting your last years, consider adding value to your leisure hours. While some retirees prefer being tech-savvy individuals enjoying social media at home, others take to growing agricultural produce for their home kitchen.
Technology also helps attain financial nirvana through relevant mobile applications, informative blogs, and real-time stock market information. Technology simplifies the future and helps you utilise your leisure hours after retirement.
8. Invest in low-risk liquid instruments:
Fixed deposits are standard financial instruments famous for providing stable returns. Moreover, they can better withstand market fluctuations, and there are provisions for taking loans against FDs. Fixed Deposits with banks are covered under DICGC insurance cover of Rs 5 lakh. Investors can get benefitted from this insurance scheme by investing in multiple FDs with different banks to the tune of 5 lacs. However, despite their liquidity and stability, they cannot guarantee high returns like stocks, especially during bullish markets.
Many consider investing in bonds to protect their investments against market fluctuations at the cost of reduced liquidity. To maintain a perfect blend of risk and return, retirees can consider an asset allocation depending on your risk appetite and projected annual returns.
9. Make use of your fixed assets to generate revenue:
Data reveals that at a constant 6% inflation rate, your savings corpus will be valued at half its original value if left uninvested. Any time your savings are not growing at least at the same rate as inflation, you are effectively losing money. A shortcut to increasing your post-retirement cash flow is to unlock the value of your fixed assets (apartments or entire properties). You can maximise that value if you consider renting a smaller house.
Although selling, leasing, or relocating involves careful thinking, you can also consider accepting guests (Airbnb setting) or opening a new restaurant at home. In addition, many retirees own second homes in tier 2/3 cities to reduce their overall expenditure and earn a constant rental income.
10. Hire a professional financial advisor:
A professional financial advisor analyses your savings corpus, oversees your investing strategies and manages your portfolio. Additionally, financial advisors also deal with your pension accounts and provide an analysis of your investments. Typically, they can determine and identify the ideal investment avenues for you.
11. Adopt a strategic, systematic withdrawal scheme
Opting for a systematic withdrawal scheme or withdrawing funds from a retirement plan systematically can help retirees plan their finances in a disciplined manner. Withdrawing money from highly liquid funds is a wise strategy.
Retirees can switch between different investment avenues while performing such systematic withdrawals. Although you can easily withdraw money from mutual funds or annuity plans, experts advise staying invested for the long term. It also helps manage your tax liabilities, especially in the long term.
There are several ways to plan, strategise and execute your post-retirement period. Retirees often overstress themselves on what to do after retirement. Saving enough funds to ensure the longevity of your retirement is crucial. Planning large expenditures and monetising your assets are top priorities if you plan to expand your savings corpus. However, maintaining health and socialising helps reduce stress and lead a stress-free retired life.
FAQs about post-retirement in India
What should you do to retire early?
Make sure to accumulate a rich savings corpus, reduce all debts, and spend proportionately on your income. In addition, make sure to invest in low- to mid-risk investment assets.
How to choose low-volatility stocks for post-retirement income?
The systematic risk exposure of a financial instrument determines its expected future return. However, large-cap funds with decent fundamentals can outperform the market and yield high revenue. Thus, retirees can expect decent returns by choosing blue-chip or dividend-paying stocks with low volatility as per their risk appetite.
What to do after retirement for constant monthly income?
Retirees interested in the real estate market can undertake investments in this sector. They can work as freelancers/consultants and share their technical knowledge. Beginning a new venture can also help you earn a decent monthly income.
Krishna is an investment professional with a demonstrated history of working in Debt Capital Markets. He has completed his B.E. (Hons) in Computer Science Engineering from BITS Pilani and MBA (Finance) from JBIMS, Mumbai. He is currently working as Investments Principal at Wint Wealth. Previously he worked at Kotak Mahindra Bank at their DCM desk and Northern Arc Capital at their Structured Finance desk.