What is the definition of a comfortable retirement to you? Retiring comfortably means reviewing your spending and setting aside some money for emergencies. Towering government debts can negatively affect the retirees, and the “holiday of a lifetime” which you have planned for long may get delayed.

But that won’t happen in your case if you save a little more than the usual. Your post-retirement plans can be adequately funded with the money you save. Here are a few practical tips for a happy retirement.

 Review spending

You should first look at your personal financials and go through the items that will change after your retirement.

For example, if you are now enjoying the privilege of driving your company’s car, you may have to replace it with a car of your own.

Therefore, you can review the auto finance options and calculate how much you have to shell out for buying a new car.

 A detailed list

List all your financial assets. Many soon-to-be-retired people include only the pension funds in the list of financial assets, which is simply wrong. You need to include items that have the potential to generate income in the future. Do the math and write down the maximum income after retirement somewhere. It’s advisable that you use a separate notepad or something for doing all these calculations.

 What would be the real returns?

The above tips are useful for determining whether you can “bid adieu” to your job right at this moment. However, there’s a third important factor which you should take into consideration. What would be possible impact of inflation on your earnings? While it is simply impossible for a layperson to guess the future rate of inflation or the possible impacts of inflation, you can sidestep these macroeconomic questions and just focus on the investment returns and the inflation rate. To put it in perspective, if the inflation is at 3pc per annum and the return on some investment is at 5pc per annum, your real returns would be 2pc per annum.

 How do you see risk?

Your life will drastically change the moment you stop pulling in your salary. From that point, you have to rely on invested wealth capital to generate income. This will impact your “financial portfolio” big time, and you have to choose the most suitable asset allocation for the changed circumstances.

 Is buying annuity an option?

Annuity rates have dropped in recent times, so you might just want to wait for the rates to improve. However, annuity has its own set of risks, which you must carefully consider.

 Assets in cash?

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If you are planning your retirement now, it’s high time you convert your assets into cash before you retire. With the freefall of equities continuing, you should have enough liquid cash reserve to protect your financial assets from a further decline in value.

Lastly, as the adage goes, you should always cut your coat according to how much cloth you have. Don’t just go gaga about that expensive holiday or that high-end luxury car. Use your money wisely!