Retiring in the Next Five Years – Here’s What You Must Know Before You Retire

While you might be planning your retirement for the last 20-30 years, the five years preceding retirement are the most important. The decisions you make in these five years will significantly impact how you live your life after hanging up your boots.

If retirement is just around the corner and you’re only left with around five years to begin your second innings, here are five questions you should ask yourself-

1. How Much Money Do You Need to Retire?

If you’ve been serious about your retirement plan in your 20s and 30s, you might have started your journey towards building your dream retirement after carefully analysing the corpus you’ll need. All the savings, investments, and money-related decisions might have revolved around the sum you’ll need to retire comfortably.

Now with just 5 years to retire, this could be the right time to re-analyse your retirement corpus and check whether the amount would actually be adequate as per your current circumstances.

2. How Long Are You Expecting to Live?

While it is not common for people to think about death, it is one of the biggest realities of life. It is only through adequate planning that you can prepare for this unfortunate but unavoidable eventuality. Simply making a reasonable estimate as per your current health and family history could add a lot of stability to your retirement plan.

Having an estimate of how long you’ll live after retirement will enable you to confirm whether or not you have enough money to last your entire lifetime. It will also help you ascertain whether you are ready to retire in the next five years or need a few more years to accumulate enough wealth.

3. Will You Have Any Source of Income After Retirement?

Earning a regular income after retirement is one of the most effective ways to keep your savings and investments secure in the retirement years. Many retirees work as consultants in the field of their expertise or launch a business to continue earning even after retirement.

A smart way to generate regular income even after retirement is to invest in a retirement plan. While retirement plans are generally long-term investment products, even if you only have five years to retire, you can consider a retirement plan with an immediate annuity. Such plans allow you to start receiving a regular pension immediately after making a lump sum investment.

4. Do You Have Any Loans You Are Currently Repaying?

A common retirement planning advice is never to carry your loans to your retirement. With no regular source of income after retiring, you’ll have to rely on your savings and investments to pay the monthly EMIs. If you are currently repaying any loan like a car loan, home loan, or personal loan, try to close it in the next five years.

The monthly EMI will be an added burden on your post-retirement budget, and every effort should be made to clear all the liabilities before retiring.

5. Have You Purchased Health Insurance?

Insurance products like health insurance are essential for every individual, especially after retirement. The chances of suffering from an illness are significantly higher in the senior years of life. And with the healthcare costs consistently rising in the country, quality treatment will only become more expensive with time.

A feature-packed health insurance plan with adequate cover can protect your finances against such healthcare costs. You can now find health plans that can be purchased even by individuals in their 50s and 60s.

Are You Ready to Retire?

Transparent answers to the questions listed above should provide an excellent overview of whether or not you are ready to retire in the next five years.

Even if you find yourself off the track, several things can be done to help you retire at the desired age. The assistance of an insurance advisor or financial consultant could play a critical role in the process.

Paul Petersen