Retirement is an important aspect of life. With increasing longevity, one cannot stress enough that one has to plan finances for it so that life goes on comfortably.
3 Stages of your Retirement
Retirement can be divided into three phases and the financials are a little different for each of the phases. Let us look at the three phases and how we should manage our personal finance for it.
➡ Active Retirement Phase
This is the phase when you have just entered retirement. You have just retired. You had a regular income which has stopped now but you might have got funds in terms of gratuity, superannuation fund etc. If you were in a business, you might have cashed out your share. You might have looked forward for retirement so that you have time for yourself, your loved ones and your interests. This is the time when you can invest time and energy in these aspects of life. You might be starting on or looking for another phase employment or income stream or a business.
➡ Slow Go Retirement Phase
This is the second phase of retirement wherein you are used to your retired lifestyle. Your children might have got married, settled in different homes and cities. (Retirement Planning Vs Child Future Planning) You will find a pattern for your daily life that keeps you comfortable and secure. It is important to keep yourself mentally and physically active. There might be some physical limitations as you are ageing.
Your medical expenditure might rise. Expenses like home renovation, tax payments and financial support for children will reduce.
It will be better if your investment portfolio is more conservative as at this stage in life compared to the earlier stages as your financial losses will have too much of a negative impact to bear or you will take a long time to recover the lost money. Check your will and make changes if necessary at this stage.
➡ Inactive Retirement Phase
In the last stage of retirement, you slow down your activities. You might need support in terms of finances, physical health or psychological health.
You may not be earning too much at this stage. It is important to manage the funds in a manner that takes care of your basic necessities, your comfort and your medical expenditure.
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