How to do proper Financial Planning and Saving after Retirement

For a majority of people, retirement means that they have come to the end of their period of earning money, unless they plan to start up their own business or keep working as consultants. For those who actually did stop earning now face a serious question. How will they use their saved up money? The real challenge here is not outliving your retirement savings, since many will retire around the age of 58 to 60 and the average life expectancy is deemed to be around 75 to 80.

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So here are a few ideas that should help in terms of financial planning after your retirement .

01. Senior Citizens’ Savings Schemes.

Many banks now offer specialized savings accounts for senior citizens or retirees that feature higher interest rates than the normal accounts, and also in addition to that, they sometimes offer additional benefits like health benefits, insurance etc. So this is basically a “two birds with one stone” kind of scenario.

02. Fixed Deposits

Fixed deposits are known to have much higher interest rates than savings accounts. This is truer for senior citizens, who get offered higher interest rates for their fixed deposits. Provided that you are not going to need a large sum of money in the short term, investing in fixed deposits will provide you with a sizable interest income. If the investor were to spread his funds across deposits with different maturity periods, a strategy called “laddering”, it allows for increased liquidity.

03. Stock Trading

Being retired will mean that you will have more time on your hands to spend on each task that you perform, since you don’t have to go to work or report to a manager. So this may be a good time to get into stock trading. Take some time to learn how the stock markets work and what the companies with the highest dividend payout rates with lowest risk are. Investing in a few of these companies will diversify your investment, giving you a level of security as well.

04.Mutual Funds

Investing your money in equity backed instruments makes sense when your non-earning period is assumed to be over 2 decades. Whatever you have saved during your working years (Salary savings, dividend income, interest income etc.) will be subject to inflation. Many studies done on mutual funds have turned up the result these equities are known to give returns that are more inflation adjusted than other assets. The main idea here is that you should focus your attention on instruments with more steady income than on ones with high but riskier returns.

05.Settling Debts

The importance of this cannot be stressed enough. Having debts like credit card bills and mortgages at the age of retirement will suck out your reserves very rapidly. So the best plan of action is to pay off these debts as soon as possible, before retirement if at all possible. But this does not mean that you should dump all your cash on the debt to pay it off. Or rather, start your retirement plans before you retire so that you will be able to start with a larger reserve of money.