After working for several decades, you might be at that point when retirement is just around the corner. But that is not a sign for you to start taking things easy, and simply wait for the time to come when you actually retire. It is a time when you have to be extremely proactive and make sure that you’re prepared for the upcoming change. In line with that, here are a few points that you should be thinking about at this stage:

List the expenses you will need to take into account:

An important factor in retirement planning is being able to foresee and plan for the expenses you expect to have. These can range from your general monthly expenses to the expenditure on your medical needs and even the possibilities of vacations and other such factors. A comprehensive list of the various expenses you need to account during your retirement is an essential part of being able to organise your cash flow effectively.

Budget your expected retirement cash flow:

It is a good idea to start making a new budget in preparation for your retirement. The first thing you need to do is calculate the income you are likely to get from various sources, which includes annuities, bonds, shares, property, etc and weigh them against your expenditures. You must also remember to account for the fact that things like health insurance premiums will be higher as you get older, and that the cost of living will continue to rise. Drawing up a tentative budget before you make the shift to retired life gives you ample time and flexibility to make adjustments to your plan.

Make sure your investments are locked in for growth:

It’s important that your investments during retirement stay protected, generate income and simultaneously grow. It is good to look for investments like annuities, pension schemes, fixed or recurring deposits, debt mutual funds etc. This keeps your savings secured, with assured returns for when you decide to retire. Further, it is also important to have some growth assets in the portfolio like equity mutual funds so as to generate returns higher than inflation which will help you maintain a similar lifestyle in future. However, the exposure towards the same should keep on reducing in a staggered manner.

You should try to minimise all your debt:

Debt is always a deterrent to any financial plan. You may have incurred debt in the form of home and property loans, student loans, credit card charges, or other personal and business loans. It is important to curb your debt as you come closer to retirement. In this sense, pay off any charges on your credit card and refrain from using it as far as possible and try to clear any outstanding loans before you make the transition to retired life. By clearing your debt as far as possible, you save a major portion of your retirement income that may have been spent on these payments. 

Prepare yourself for transition and the emotions that follow:

Retirement is one of the biggest changes in your life. During the onset of this period, you will most likely experience states of ambiguity, confusion and anxiety that may cause emotional turbulence and inconsistent behavior. This could lead to various problems like erratic spending, alcoholism, depression, and so on. So it is imperative that you have a sound financial transition plan that equips you to take on this big life event. If you don’t already have one, a certified financial transitionist is the person you need to meet to develop your unique transitions plan.

Keeping these points in mind will help you improve your current retirement plan. However, if you haven’t begun planning for your retirement yet, don’t get worried – but start as soon as possible! It’s never too late to get the gears moving. A good place to start would be to decide on the type of retirement you see yourself having. Many individuals try to maintain a stake in the workforce with a part time job, while others find solace in a much simpler life. Making this decision early can help you organise your goals better and give you the clarity you need to reach them efficiently.