How To Secure Your Family's Finances Before You Retire?
We're all looking for ways to make our money grow, and secure ourselves and our family’s financial future. But reaching that secure destination needs preparation, discipline and careful planning.
Apr 2023
3 mins read
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5 tips to get you started
1. Consider your responsibilities
Your current and future responsibilities such as the need to provide for spouse, children and ageing parents will have an impact on what financial security means for you. You must ensure you have adequate insurance to cover yourself and your family in the event of a emergency or accident.
2. Set goals for your retirement
Setting specific goals are an important part of any financial plan. If you know your financial goals and have the resources to achieve them, you are more likely to feel financially secure. Prepare a list of your financial goals, and rank them in order of importance. Knowing where to begin means you may already have a plan.
3. Hire a financial advisor
Financial decisions can be very complex. To help make sense of everything, take the services of a professional financial advisor like a certified financial planner. Having a financial advisor is a good way to make sure you are on track for financial security.
4. Create an emergency fund
Emergency funds will not only help us meet unexpected expenses but can also help us tide over family crisis/ unemployment. As suggested by various financial experts, putting aside a sum equal to six to twelve months of salary should be adequate to provide against many such emergencies.
5. Protect yourself and your family with appropriate insurance
It is important to purchase insurance for your family’s and your health, your home or a rental unit, car, etc. to ensure financial security for your household.
When to do a financial health check-up
It is not unusual for our ideas about the future to change over time. Unanticipated life circumstances may also require us to change our financial plans. Review your retirement plan with your financial advisor every year or two and revise it as necessary to help you reach your evolving goals.
What to keep in mind while doing a financial health check-up
1. Track your spending
This exercise is an important part of your financial check-up. Not only is this exercise eye-opening, but it also makes your finances a priority. You will be actively thinking about how you spend your money. Tracking your spending can also help you see where you can cut less important expenses from your budget.
2. Prepare for the unexpected
Life has a way of throwing an occasional wrench into the best laid plans and this remains a possibility during your retirement. Build yourself a financial buffer that is quickly and easily accessible, so you are better prepared to meet needs such as unexpected home repairs or medical expenses.
3. Know your investments’ performance
Calculate the return on each of your stocks, bonds, or mutual funds and ask yourself if you are satisfied with their performance.
4. Evaluate your debts
As part of your annual financial check-up, consider how well you're doing with managing debt. Specifically, evaluate your debt to income ratio. Carrying high-interest debt like credit cards or personal loans can be one of the most damaging things for your financial health because the true cost of this debt is so much higher than the amount borrowed.
5. Check your credit report
This is a bonus step. Having a good credit score is part of being financially successful. Your creditworthiness is used to determine your eligibility for loans, renting a home, and also helps you get lower interest rates. Remember to check your credit report every year.
6. Review your estate plan
Reviewing your estate plan is a vital part of your financial health check-up. This plan can ensure that your wishes are carried out and that your family is financially cared for. Your estate plan will designate the beneficiaries to your assets. Without an estate plan, your assets will go into probate, which means the courts will decide how your assets will be distributed.
Annual financial planning for a family requires considering the needs and desires of everyone involved. It involves strategic decisions about funding your retirement, helping children with their education expenses, caring for elderly parents, aiding disabled siblings, purchasing long-term care insurance and life insurance, and timing your retirement and that of your spouse.
If you strategically plan for each of these and learn about the different options and consequences of each choice, you are less likely to face unpleasant surprises and financial struggles that could prevent you from retiring when and how you want.
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PGIM India Asset Management Private Limited
(CIN - U74900MH2008FTC187029)
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All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindia.com/mutual-funds/ieid.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more
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