Oct 05, 2017 11:54 AM IST | Source:

Retirement: Here are steps you should take to manage your finances

With life expectancy on the rise, you need to have savings and investment income that last you the distance.

Your retirement years could be one of the best periods of your life. You have done your bit to earn and making a mark for yourself. It could now be the time to relax travel and enjoy. However, to make it work you need to have a big enough saving and investment kitty to help you meet your daily needs as well as provide for leisure.

With life expectancy on the rise, you need to have savings and investment income that last you for many years. “As you retire you need to have a corpus that will suffice the financial need for self, spouse and dependents, if any, until the age of 85-90 years,” Amar Pandit, Founder & Chief Happyness Officer at told Moneycontrol.

So what are the basic financial planning steps you should take to ensure that you money lasts the full distance and you slip in the middle with funds drying up? One of the basics, says Rahul Parikh, CEO, Bajaj Capital, is to have a healthy balance between equity and debt investments. It is best to reduce risky investments as you near retirement in favour of debt. “Investment portfolio should be a mix of debt and equity to maintain assets allocation,” Parikh says.

Here are some of Parikh’s suggestions for handling your money during your retirement years:


  • Work out your monthly expenses requirements after retirement,

  • Set aside the emergency funds for medical emergencies and health check-ups,

  • Invest in instruments which provide you regular return to maintain household expenses,

  • Invest in instruments that beat the inflation on a post-tax basis,

  • You must prepare your will.


  • Investments with long lock-in period should be avoided

  • Equity exposure should not be more than 25% of the overall portfolio

  • Avoid investing too much in investment schemes

  • Never invest in single name or do not forget to mention nominee name

  • Never stop working. One can work as consultant or as a freelancer which not only helps maintain regular cash flow but also make an individual physically fit.

Amar Pandit advises against too much exposure to unit-linked insurance policies (ULIPs) and pension plans among his suggestions for post-retirement financial planning. He advises the following steps:


  • Upon retiring, make a rough estimate of the financial needs including corpus for medical emergencies and unexpected liquidity needs.

  • Take into consideration inflation and its effect on your savings and financial needs over the years.

  • While investing in debt-oriented instruments or FD take into consideration the tax implications

  • Money required for short term needs should be parked in short-term debt funds and that which is required in the longer term should also include equity investment as one of the components.


  • Do not park large sums in taxable debt investments.

  • Avoid investing in schemes that has a capital loss risk, such as derivative.

  • Do not buy expensive unit-linked insurance policies. Firstly, at this stage of life, one doesn’t need insurance cover and secondly, paying higher costs does not give extra returns in comparison to equity-oriented mutual funds.

  • Refrain from buying numerous pension plans to generate a pension income. These plans are neither inflation protected and nor can they be availed at any time due to their lock in feature.
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