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Financial planning for 40+ year old late starters

Are you among the late starters who haven't planned enough for their future? Are you staring at a bleak life post retirement?

Well, it may not be too late to start.

Of course, it is not going to be as easy as starting in the late 20s or early 30s. Let me warn you that the climb uphill is likely to be steep and tough; but not impossible. As per one inspirational quote... 'When the going gets tough, the toughs get going'.

So here's what you must do to prove your mettle and toughness.

You may need to take some extra risk
Many times batsmen fritter away first 30-35 overs in a one-day cricket match, scoring much slowly, despite being fully aware of the required run rate. This can turn the last 15-20 overs into a real nightmare. With steep asking rate necessary to win the match, there is no option but to go for unconventional and risky shots. Given that the alternative is sure-shot defeat, taking high risk becomes inevitable. There is at least some probability that it may pay off.

Similarly, if you are likely to fall way short of building an appropriate retirement corpus, taking risk with equity investments may become a necessity. Beware! This doesn't mean that you have to follow an adhoc approach and go into it blindly. It only means that you have to judiciously use equity, at a time when financial prudence demands de-risking one's portfolio. Otherwise, the alternative could be hand-to-mouth existence. 

You may need to do some extra belt-tightening
No more dinners at 5-star hotels; no more diamonds and designer dresses; no more high-end mobiles and electronic gadgets; no more luxurious vacations; no more splurging on your credit cards. Yes, its time to cut all such frivolous expenses. In fact, even the essentials have to be better managed to squeeze out as much cash as possible.

You have lot of catching up to do. You need lots of money that can be put to work hard for you. You have to cut down your debts. You have to maximize your investments so that they can compound as much as they can in whatever little time that is left till retirement.

You may have to add extra health insurance cover
Not only are the costs on medical treatment shooting up, but also such problems crop up more often as we grow old. Therefore, managing medical expenses is one of the biggest challenges post retirement.

Thankfully, we have health insurance policies that can mitigate financial hardships accompanying any medical problems. However, given that there are many different kinds of plans available in the market, you must have a well thought-out strategy in place for medical exigencies.

You may need to add some extra skill
In today's times, 55-60 is too early to stop working. Our health profile is much better than those of the same age 15-20 years ago. So, while you may have to retire from your present job, there is no dearth of opportunities to become re-employed. This would supplement your retirement corpus.

If your present skill sets can earn you money post-retirement, well and good. If not, you have to learn a new vocation and enhance your earning potential. And this is the right time to start building on these new skills. Don't wait till retirement. As you grow old your ability to acquire new knowledge diminishes.

You may need to become extra realistic
If you have been staying in a posh house in an up-market locality , you can convert it into useful cash by moving to a less expensive location / house. If your kids have moved out and you find the present house too big for your needs, you have a golden chance to move to a smaller house. This would not only generate some corpus for your retirement, but also reduce your day-to-day expenses such as property taxes, house maintenance, etc.

But this also must happen now. You can't wait till retirement. It takes time to adjust to the new surroundings. This can happen easily and conveniently when you are still young. As the age progresses, one's adaptability diminishes.

Nobody can go back and start a new beginning, but anyone can start today and make a new ending.” rightly asserted Maria Robinson.

Therefore, no more procrastination. You have already delayed too much. So... get going... NOW. You owe it to your family.

An Investment In Knowledge Pays The Best Interest ~ Benjamin Franklin

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