4 Parameters That Can Help You Decide If You Are Retirement Ready

Before you embark on your retirement journey, you must ensure that you have carefully considered some crucial aspects with regard to your financial obligations, including your ability to sustain yourself in your desired lifestyle in your retired life.  

It is significant that you decide on your goals in advance in order to make a smooth transition to a comfortable retired life rather than enter your retirement phase with worries that can potentially lead to mental stress.  

So, here are four parameters you could consider to evaluate yourself and decide whether you are ready to take the plunge to a retired life.  

You Are Debt-Free 

Walking debt-free into retirement is a golden advice that professionals vouch for, as debt not only threatens your financial security, but also your legacy, financial flexibility, besides putting you at risk during emergency situations.  

It is important for a person to make an organised plan to come out of debt before retirement. A debt-free retirement means more financial freedom, less stress, and more disposable income for your personal interest, such as hobbies and travel.  

One can afford a better and more lavish lifestyle by paying off debt early as there is not only less burden, but also less financial obligations to bother about. 

You Have Saved Enough 

According to a survey by PGIM India MF, titled Retirement Readiness Survey, most Indians lack a retirement fund, suggesting that those planning to retire earlier than the traditional retirement age need to save and invest more aggressively.     Typically, people retire at 60, but those in their 40s or 50s need to vigorously plan for a long retirement period, as their retirement period could last for 30-40 years or more depending on their retirement age as well as their longevity. As such, to calculate their retirement corpus, they need to consider factors, such as inflation, health condition, lifestyle, current savings, liquidity, and income sources in retirement.    Let’s say, for instance, Akash needs Rs 11.5 lakh as yearly expenses at the age of 40. In such a scenario, his retirement corpus must include inflated expenses each year. It is important to note that no fixed amount can suit all retirees. As such, one should consider equity investments and other retirement investment schemes, such as National Pension System in order to build a desirable retirement corpus.   

You Have Sorted Your Health Expenses 

As retirement approaches, managing health expenses becomes crucial for financial planning. Long-term care is a critical need, and planning ahead can safeguard one’s retirement funds in case of a health emergency.    Rising healthcare costs can drain one’s savings in retirement due to increased, and sometimes, prolonged medical care. Thus, having a plan to cover these expenses early can ensure better affordability without compromising with one’s lifestyle. A strong health insurance plan ensures protection against unexpected medical bills. Allocating funds for medical needs will ensure peace of mind and allow you to enjoy your retirement without stress.   

You Can Provide For Your Dependents 

In retirement, it’s crucial to consider the financial needs of your dependents, including spouse and dependent children and parents. A retirement plan should address their financial needs, including living expenses, healthcare, and educational requirements.  This will ensure financial security for them, even if you no longer have a regular income. A stable retirement plan can act as a safety net during unexpected circumstances involving health issues. It also helps maintain the quality of life by funding education, housing, and medical expenses. A stable financial foundation in retirement is essential for peace of mind, allowing you to enjoy your retirement years without worrying about your dependants’ financial wellbeing.