Outlook Money
VRS is a voluntary retirement scheme offered to public sector and government employees. Such schemes usually offer employees the choice to retire early, before reaching the official retirement age, and receive a lump sum payment.
Employees need to keep in mind that VRS funds should be utilized carefully to address current requirements and to ensure a stable retirement. Individuals should not tend to spend suddenly received amount quickly.
First, one should list all urgent financial expenses such as loan repayments, children's education, or medical expenses. One must keep a portion of the VRS fund in a savings account or liquid funds to address these needs promptly.
One should use part of the VRS fund to buy health insurance coverage if not already in place. This prevents financial stress during medical emergencies.
A good strategy involves splitting the VRS amount into several segments, each for 10 years. The money needed for the initial 10 years of retirement should be fully invested in debt instruments, with a systematic withdrawal plan to manage expenses during this period.
One should also allocate 20-30 per cent of the corpus to equity mutual funds for long-term growth. One can choose large-cap or balanced funds to minimize risk while benefiting from market growth overtime.
Compiled by Syed Muskan