NOTHING is pure gold anymore. Not your golden wedding ring, not your new 'gold' earrings. Not even that golden handshake!

Just another euphemistic term for Voluntary Retirement Scheme (VRS), the golden handshake is generating mixed feelings today.

On the one hand, it is a cash bonanza at one go. But on the other, it may not be the ideal ending to a long, fruitful career.

Here are three drawbacks.

i. How will you maintain your lifestyle without regular revenues coming in every month?
The earlier you retire, the more expenses you might have to consider - children studying/ getting married, housing/ car loans to be paid and so on.

ii. Your investments could suffer.
Your insurance policies might languish if you cannot afford to pay off the premiums.

iii. You may underestimate your living expenses after retirement.
Cutting down or keeping a tab on expenses now that there is no fixed income or salary could be a bit too much for most people.

That is not to say VRS is not a good idea. It could work in your favour if you invest smart.

Before you do, here are some things you could keep in mind.

i. Analyse
Jot down your needs, expenses and debts also accounting for any conceivable spurt in future spending such as childrens' education. Plan for unforeseen medical expenses, even if you have medical insurance.

ii. Change your mindset
Anyone determined to live the rest of his life on interest from bonds and deposits is guaranteed to remain poor. If you need to create wealth and beat inflation, equity must play a major role in your portfolio.

ii. Get professional advice
Now is when a professional advisor can step in and build a model portfolio for you. But ensure the advisor is tracking the performance of your portfolio and making the necessary changes.

Retiring at 45 instead of 65 need not be scary if you follow the principles of good planning. So go ahead. Treat yourself to 20 years of a golden existence.

And you can make sure it will be pure!

Photograph: Eric Thayer/Getty Images 

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