Smart money Tips for Moves For Comfortable Retirement
You worked hard, saved regularly and invested intelligently to build a sizeable nest egg. So when you finally retire, one would think it is time to relax and enjoy the fruits of your labour. But don't take your foot off the pedal just yet. You still need to do one crucial task: deploy your retirement corpus in a way it can sustain your expenses for the rest of your life.
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| Smart money Tips for Moves For Comfortable Retirement |
Higher withdrawals can be sustained if you allocate some portion of the corpus to equities to earn a higher return. Even a 10-15% allocation to equities can push up the overall return of the portfolio by 100-150 basis points. The MIP funds from mutual fund houses, which invest only 10-20% in equities have given average returns of 9.4% in the past 10 years. The best performing MIP fund has given 13.5%. In the table, we have assumed 9.5% returns for such an allocation.
But the income from fixed deposits is fully taxable at the marginal tax rate applicable to the investor. Those earning more than Rs 25,000 a month (Rs 3 lakh a year) will have to pay tax. If you are in the high tax bracket, you can go for debt funds to avoid the 30% tax on your retirement income. The income from debt fund investments is treated as capital gains. If you withdraw before three years, the short-term capital gains get the same treatment as ..
The good part is that you get a tax deduction when you buy health insurance. The premium is eligible for deduction under Section 80D. From this year, the government has provided for enhanced deduction to senior citizens of up to Rs 30,000 a year.
AVOID BUYING ANNUITIES - One way to ensure lifelong income is to invest in an annuity. While this does away with the risk of running out of money (the pension is given out till death), the annuity is not a great option. ..
RPAY OFF YOUR DEBTS - It is best not to carry loans when you have retired. If you have outstanding loans that charge you more than what your investments are earning, you will be better off if you prepay them. The quicker you clear your debts, the lower is the interest outgo. Also, avoid taking fresh loans at this stage. It may seem tempting, but resist the urge to invest in real estate at this stage, unless you want to shift to a smaller accommodation in the suburbs. "It's ..
With every loan instalment, the bank increases its ownership of the house. After the death of the last surviving owner, the legal heirs have the option to either repay the loan or allow the bank to sell the house and give them the difference. But there are some conditions to be met. The scheme is open only to senior citizens, monthly payments cannot exceed Rs 50,000 and the property must be self-acquired, not inherited or gifted.
MAKE A WILL - While you do all this, don't forget your estate planning. For many, the task of writing a will is best left for the later years, something they can do after retirement. Well, now that you have reached the destination, there is no reason to put it off further. A will is not something that only the super-rich need to write.
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