6 Ways to Remain Financially Independent in Retirement

Retirement comes with plenty of free time, and the option to relax and enjoy a life of leisure. But some people also struggle with the boredom and lack of purpose. Moreover, your financial planning doesn’t stop upon retirement. There are newer goal planning considerations in store. You need to pursue the right personal finance and investment planning to protect your retirement corpus from inflation and taxes. You’ll continue to manage expenses such as household expenses, lifestyle expenses, emergency medical expenses etc. You’ll have to maintain adequate life and health insurance to protect your retirement corpus from unforeseen events.
Feb 2023
5 mins read
As you begin goal setting for retired life, you’ll need to plan for liquid funds to meet monthly living expenses in the absence of a regular salaried income. In this context, working after retirement can help you maintain a sense of purpose, fill the time and provide additional income. As life expectancy increases and we remain healthier for longer, taking up freelancing or consulting in retirement can reduce the risk of outliving your retirement fund.

Here are six ways to remain financially independent after retirement:

  1. Invest in debt funds – One of the key smart goals in financial planning is to make the right tax-saving investments for a steady flow of returns during your retirement phase. Since debt funds invest in securities such as corporate bonds, government securities and other money market institutions, you may earn a steady interest income and optimise capital appreciation. You can consider short-term funds with a maturity of 1-3 years or long-term funds with a maturity period of 3-10 years1.

  2. Invest in equities – While it’s advisable to adjust your allocation to include debt instruments, it makes sense to retain some investments for retirement planning in equities too, because fixed instruments may not be as effective in beating inflation. There’s also a chance of outliving your retirement savings due to high life expectancy and increasing medical expenses, so long-term investments in equity instruments can be an ideal tip for money management. You can consider large-cap equity funds since they offer potential for sustainable returns over a period of time. If you want to reduce your risk exposure, you may consider flexi-cap or multi-cap equity funds. This allows you to diversify your portfolio across multiple sectors and reduce risk. Equity mutual funds carry market risk and you should consult a financial advisor before investing.

  3. Maintain a contingency fund – You may have already incorporated a contingency fund in your personal finance plan before retirement. But after retirement, there may be higher chances of financial emergencies, and getting loans in these situations is difficult for retirees. If you withdraw your fixed income instruments before the maturity period, you may also face penalties. Hence, a contingency fund is essential to cover essential expenses such as rent, utility bills, medical costs, insurance premiums and EMIs in an emergency. Try to keep a 6 to 12-months reserve in a savings account.

  4. Venture into freelancing – You can use your skills to continue to earn an income post-retirement. Many industries have a steady demand for freelancers. Several websites offer freelancing jobs in multiple sectors. You can thus maintain a flexible schedule while continuing to earn some money with your existing skills.

  5. Consider training and consulting – By the time you retire, you have acquired a lot of experience in your field. You can share these insights with others. Many start-ups and businesses are eager to hire consultants in advisory capacities. You can also help train employees in an organisation. Blogs and videos are another way to share your ideas and expertise. If you have entrepreneurial dreams, you could even set up a consulting practice of your own.

  6. Follow your passion – You can also choose to follow a dream or passion. Pick up a new skill or hobby (or hone an existing one) and monetise it to earn a new income. This would help you learn something new, fulfil your potential and make a living out of doing what you enjoy.
There is no end to the things you can achieve after retirement. Thorough financial planning and careful investments for retirement planning will set you up for a comfortable retirement, and finding a second innings in freelancing or consulting work can secure your hard-won independence.

Disclaimer: Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

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