How to plan your finances in your 50s – Part 2

We saw some of the major tips on how to plan your finances in your 50s in the previous post. This article will focus on other things that you need to focus on and stay away from while planning for your retirement.

  • It is not a good choice to burden yourself with any new loans and therefore new EMIs when you are nearing retirement. This will not only give you stress but also reduce your savings which might otherwise be available for adding to your retirement fund.
  • You should never take money from your retirement savings to use for other expenditures before your retirement.
  • You should try and finish off any existing loans that you might have before you retire.
  • You should not compromise on planning for your retirement fund under any situation, especially when you in your 50s.
  • To fund for your children’s education, you should take an education loan in their name. This will not only avoid you dipping into your retirement fund, but it will actually give your children a sense of responsibility and financial discipline.
  • It’s a very bad choice to use your retirement corpus or take a loan to invest in real estate/ property when you are in your 50s. It is a well-known fact that real estate prices rise very slowly or they even drop down sometimes. Even if the real estate value increases by 3% per year consecutively every year, your investment will take at least 10 years to create positive and reasonable returns.
  • You should find means to optimize your tax by picking up any tax-efficient investment. Fixed deposits are not that tax efficient as you will have to pay tax on the interest made every year. In this case, your money loses the power of compounding. Instead, invest in debt mutual funds where you have to pay tax only when you withdraw that money. In this way, you are postponing your tax liability to a period when your income and your tax liability both will be lower.
  • If you have finished your home loan EMIs, then invest that amount in debt or balanced mutual funds. You should not buy Ulips or insurance plans that combine insurance and investment when you are in your 50s.
  • Do not be in a hurry to surrender your life insurance policy in your 50s. If you surrender your policy when during the early tenure of the plan it will give you some benefit but not at the end when it is about to mature. You will lose the benefits that the plan has to offer. So better continue with the policy even if the returns are low.
  • If there is an option or chance to postpone your retirement in your current company, then grab that opportunity or try to look out for any alternative work option now itself before you stop working.

Remember that when you are in your 50s and nearing your retirement you should be very cautious about what you spend and how you spend. You can borrow a loan for your children’s education or buy a health insurance cover for your medical expenses, but there is no such choice available for building your retirement fund.


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