You need to ensure that you have a strong financial back up even if you are single. Having the right kind of savings pattern can ensure that not only can you be benefited from covering your expenses after retirement but can also guarantee you a cover for medical emergencies and fulfill your holiday aspirations in abroad.
The things you need to plan are:
Health Insurance:
Having a health insurance cover can finance up to 90% of your medical expenses without causing a huge burden on your savings. If you are a working person, and if your company provides you with an insurance policy, it is very important to go for an individual cover from accidental disability and critical illness.
Life Insurance:
This can be needed if you have dependent parents or an unpaid home loan or car loan. But if you have any other assets to clear off the loan amount, then taking a life insurance cover is not that necessary.
Contingency Fund:
If you are a single and have a fluctuating income, it is advisable to have a contingency fund equivalent to at least a year’s living expenses. Otherwise, a 3 month contingency fund is best suitable. But that might vary from one person to the other depending on the income levels, standard of living etc. Also, it is best advised to leave your contingency fund in the form short term liquid assets as in short term mutual funds, since, if it is kept in a savings bank account, not only accounts for a 3.5% interest but also tempting you to use the cash through ATM swipes. A contingency fund of a short term mutual fund can provide you with an interest of 4-4.5% p.a.
Real Estate:
It is very important to have a property of your own. If you are your parents’ only child, the requirement can be easily fulfilled if your parents have their own home. But if you have siblings, then their share in the house is obvious, forcing you to get shelter elsewhere. Places like the Mumbai city, where the leasing period lasts as long as 11 months, it becomes too hectic and tiresome, especially when nearing retirement, to constantly change your house. So, it is advised to always see to that you have a property of your own.
Inverse Mortgage:
This has been recently introduced in India and is not one of the best options, since, inverse mortgaging may provide you a maximum of 60% on the value of your own house. But can be opted, if you are looking for a source of income post retirement or do not want to pass on the property to anybody else.
Retirement:
Planning for your retirement has always been considered to be quite a tedious task as it requires to opt for systematic and timely investment of funds to finance your post retirement needs. You can start off early by investing a good deal of your income into equities first, Then, 5 years before your retirement, invest only 25-30% of your income into equities and the rest into PPFs since, PPFs are considered to be one of the best avenues when it comes to investing in debt instruments. The reasons being, apart from the lock in period, they provide you tax benefits and gives you good returns.
A pension policy is also appreciated as it can assure you regular income as well.