Retirement Plans to present your dad.
Retirement Plans to present your dad.
The rules governing retirement are rapidly being rewritten. Life expectancy is increasing, but so are the expenditures of healthcare and the incidence of lifestyle-related disorders. As a result of the increased rate at which people transition from one job to another, corporate employees are being made redundant at a faster rate, and pensions are being reduced in value. You may be thinking about giving your father the very thoughtful gift of a retirement plan in the middle of these shifting and tough retirement trends as a way to reduce the pressure on him throughout his senior years. This would be an excellent idea.
Where exactly do you want to start?
First things first, think about where your father is in his life. Is it going to be a few more years until he retires (for example, if he’s in his early fifties), or is it getting closer all the time? If the former is the case, the finest present you can give your father is the gift of a financial plan that will assist him in increasing the size of his retirement corpus when the time comes for him to finally hang up his work boots for good.
The majority of people make catastrophic errors in their retirement planning, which leads them to spend their golden years with their belts tightened and a ‘bare minimum’ standard of living out of concern that they would outlive their funds. This highlights the importance of financial planning. It goes without saying that this is not an enviable position to be in after having put in hard work over the past four decades. If your father still has eight to ten years till he retires, this is a long enough timeframe to take some corrective measures to make the most of his remaining earning years in order to maximise his potential retirement savings.
The first thing you should do is consult with a financial expert so you can build up a sufficient nest egg for your retirement. In order to accomplish this goal, several other metrics, including current monthly spending, life expectancy, inflation, returns on post-retirement corpus, and projected retirement age, will be taken into consideration. Because your father may have only done “back of the envelope” calculations up until now, the numbers may shock you. However, even substantial deficits can be covered over timeframes of eight to ten years through investing with the appropriate processes, avoiding behavioural traps, and taking calculated risks.
Now, let’s take a look at the second possibility, which is to say, if your father’s retirement is somewhere around the corner. In that scenario, he will need to make sure that the money he has saved up goes as far as it possibly can, which is why it is necessary for him to take risks in a calculated manner. If you are considering making an investment on his behalf, please make sure that you steer clear of typical government-backed plans like SCSS or POMIS. These plans offer low returns after taxes and don’t give investors access to capital, so you shouldn’t invest in them.
Do not give in to the temptation of purchasing an annuity plan in his name from a life insurance company, regardless of how appealing their advertisements may make it appear that these plans are. Because these plans are structured to deliver very low returns in the event of a normal life expectancy scenario, and because funds that have been annuitized cannot be un-annuitized, liquidity is almost non-existent in these plans in the event that your father needs to use the funds in an emergency circumstance.
Have a conversation with your father and a certified financial planner about the calculations before you simply buy an ad hoc “retirement plan” for him. This will save you time and money in the long run. Start with how much he has saved up, add how much you can contribute annually or as a one-time ‘present,’ and then work it backwards in terms of what is a viable monthly income that can be earned by accepting a calibrated degree of risk.
This will give you an idea of how much you can contribute. Keep in mind that this regular income will need to be increased on a regular basis in order to take into account the effects of inflation. After you have completed the necessary calculations and determined what you should be expecting, the next step is to build a solid SWP (systematic withdrawal plan) and a diversified portfolio consisting of equities mutual funds and fixed income assets (including fixed deposits for senior citizens).
The greatest retirement plan that you can give your father is more than just money or an investment product; rather, it is your effort to assist him in properly building, managing, and deploying his retirement corpus with the assistance of a reliable financial advisor. This is the finest retirement plan that you can give your father. If you do this for him, it will go a long way towards ensuring that he can spend his retirement years worry-free and enjoying his life.
