- Figuring out your net worth is the first step by drawing up a current list of your assets and liabilities.
- It will also give you a broad idea of your current asset allocation.
- Once you have figured out where you stand, find out your attitude towards investing, as your ability to take risks determines your options.
- Factors that affect your ability to take risk are:
b) Variability of income after retirement
c) Liabilities still left to be taken care of
d) Dependents after retirement
e) Past investments to act as a cushion
f) Insurances to take care of your liabilities
- A real net worth statement provides a clear view of your finances by subtracting debts from assets, on the basis of which you can also determine your actual monthly income after retirement.
- Thereafter, you would have to determine the lifestyle you intend to lead in your retirement, so that you can calculate your monthly expenses, and escalate them by the inflation factor for a retirement period of 35-40 years.
- Lastly, match your retirement income and expenses by selecting simple investment products - both equity and debt - to decide/review your current asset allocation to arrive at a suitable retirement corpus.