A well-conceived retirement plan ensures you meet your expenses adequately at various stages of your life including your liabilities and contingencies. Wealth Creation is a life-long process and so is Retirement Planning. Accumulating wealth and simultaneously incurring cost for meeting your needs warrants that you have proper wealth creation and management strategies in place. Retirement Planning is one of the most important strategic exercises that you need to do to accumulate wealth.

No, regular savings including PFs, PPFs, EPFs, bonds or any debt instrument are not enough to see you through your life after retirement. The returns from these regular default investments are guaranteed but low in comparison and are not sufficient to beat inflation and market volatilities. Besides, the quantum of savings made in these instruments might not be enough if future requirements are not carefully considered and planned for.

Inflation can erode your retirement corpus and diminish the purchasing power of your savings. It’s necessary to absorb the impact of inflation with a sound and prudent Retirement Planning strategy in place. It’s important to make realistic projections for the rising rate of inflation and adjusting your savings accordingly. Seek professional / expert advice to create an investment portfolio which gives you higher returns and helps you meet rising costs and inflation.

Asset allocation is essentially an investment strategy to stabilize risks and returns by choosing investment instruments according to your financial goals, risk tolerance and time horizon. Asset classes have different levels of risk and return variability. Each asset class may perform differently over time. Successful asset allocation requires finding the proper mix of assets to balance reward with an acceptable level of risk.

Asset allocation is critical for long-term investing and retirement planning as it can help absorb the impact of market fluctuations and balance your tolerance for risk. A downside of a specific asset class is usually neutralized by an upside of another asset class. This way you can enjoy the upside and de-risk the downside to a great extent. Asset allocation is one of the most important steps in retirement planning and research has shown that 90% of returns are on account of asset allocation decisions.

Prudent asset allocation can help you ride out the ups and downs of long-term market performance. No single asset class will outperform another consistently and no single asset allocation strategy may be right for everyone. Some investments may be up while others may be down helping minimize the overall potential impact of market decline and enable you to reach your retirement goals smoothly.

High-yield assets typically experience high volatility. You can balance these assets by investments with lower but guaranteed rates of return (like debt or sovereign instruments) to protect against large scale decline in value.

Prudent asset allocation can help you balance your appetite for risk within your timeframe and retirement goals. This requires assessing, adjusting and tracking your investments regularly.

• Assess your portfolio — Assess your portfolio allocation regularly to make sure it matches your risk tolerance, time horizon and retirement goals and needs.
• Adjust your allocation — Adjust your allocation mix and re-align it to your retirement goals based on your risk tolerance and investment horizon.
• Track your investments — Re-visit your asset allocation regularly to make sure your investments are aligned with your retirement goals, since your investment timeframes and risk tolerance may change over time.

A 3-6 monthly financial check-up for the short term and a 3-year long-term horizon check to make sure your investments are aligned with your risk tolerance and long-term retirement goals is usually recommended. However, you need to review your portfolio when you anticipate a major life-event.

You would be required to do the following:

• Make a realistic assessment of your existing wealth and risk appetite based on your life-stage.
• Perpetuate your income ladders.
• Make wise investments and stay invested.
• Make wise choices and do not over-estimate or under-estimate your options.
• Be prudent and disciplined with your finances.
• Seek professional advice.

It is necessary to continue building wealth even after you retire. Some of the ways to make more wealth out of your preserved wealth are:

• Reinvest in annuities, debt instruments and equity investments.
• Avail tax free investment options as far as possible.
• Invest in debt funds with dividend options.
• Take all tax breaks available under senior citizen schemes.
• Seek professional advice