Last Updated on October 26, 2019 by Gopal Gidwani

During your active working period, you would leave no stones unturned to ensure all your financial goals are met. You might even put in an extra amount of efforts to build a financially secure future. Today, it is essential to have sufficient resources to sustain our lives after retirement comfortably. Therefore, determining the correct financial goal for your post-retirement is as crucial as pre-retirement years.

While planning for retirement, you should draft your retirement plan carefully since your life depends on it. To let you make informed financial decisions during retirement, let’s understand the four important pillars of retirement planning.

1) Identify your early-retirement goals
When you’re young, you might focus on building a stable career for yourself. During your hustling period, you might tend to ignore your dreams and aspirations. Many people might aspire to globetrot the entire world, pursue their favourite hobbies, write their novel, and so forth. Such life goals deserve to be given a chance after your retirement. Therefore, you should evaluate your expenses that may incur after retirement and plan your investments accordingly. If there is an imbalance between your retirement goals and financial requirement after you retire, you might face a difficulty to arrange the fiscal deficit during that moment.

2) Ensure a steady flow of income
Many people are in the wrong notion that a lump-sum corpus can suffice your financial requirement after retirement. However, this belief is untrue since you might be unable to predict your financial needs in the future. If you dip into your retirement corpus during a financial crisis or a medical emergency, it will gradually come to an end. Therefore, you should focus on your regular income plan to ensure that your routine expenses are met regularly. You can invest your retirement corpus in pension plans like a Unit Linked Insurance Plan (ULIP), National Pension System (NPS), etc.

3) Combat the impact of inflation
Inflation can become a significant cause for the depletion of your retirement corpus, if not managed well. You can concentrate on receiving a high rate of return on your retirement corpus to combat the effects of inflation. For instance, the inflation rate during your retirement is 5%, and your retirement corpus is of Rs. 1 Crore. Under such a circumstance, invest your retirement corpus in those investment vehicles, which will offer you with a post-tax return beyond 5% p.a. In simple terms, the higher the returns, the higher the chance of beating inflation.

4) Opt for adequate insurance coverage
Having adequate insurance coverage will ensure your financial protection against any uncertainty. You can either purchase a life insurance plan or a health insurance policy for your loved ones. While life insurance ensures the financial independence of your spouse after your death, a health insurance policy will safeguard your family from medical contingencies. Therefore, purchase a suitable insurance plan based on the needs of your loved ones during retirement.

Conclusion
To sum up, early retirement planning is built on the strong foundation of your present financial planning. Therefore, see to it that you start early to ensure you have a large corpus by the time you reach your retirement. The higher your fund accumulation, the higher your chance of living a stress-free retirement period.

Apart from these points mentioned above, you should review your retirement goals regularly and make the required changes in your investment portfolio accordingly. This is simply because financial farsightedness and smart investment planning go hand in hand, which will eventually make it easier to live a financially secure future.