Hacks Elders Must Be Aware Of To Manage Post-Retirement Finances

Managing post-retirement finances now made easy with these valuable tips.

About 48 per cent of Indian older adults aren’t aware of their retirement kitty and a whopping 69 per cent of them do not have a post-retirement financial plan in place, according to PGIM Retirement Readiness Survey, 2020. Managing budgets, funds and investments post-retirement could be tricky but is extremely important and it always helps to have expert advice. Babu Krishnamoorthy, founder & Chief Sherpa at Finsherpa Investments Pvt Ltd., a boutique wealth management firm based in Chennai, shares some key post-retirement finance management hacks with Silver Talkies. 

Ten things elders must take care of to be financially self-sufficient post-retirement

Consolidate multiple bank accounts and investment accounts, close the unused ones. When you are young, you may often experience an increasing need for multiple bank accounts and investment accounts. “When you grow older it becomes difficult to keep track of so many accounts and also after your time, it becomes an exhausting job for your family members to manage multiple accounts. Hence, as you grow old and approach retirement, you must make sure to consolidate multiple accounts into fewer, easier and simpler to manage ones. Also, close the unused ones,” says Krishnamoorthy.

Ensure that all your investment accounts are jointly held or they have nominations in place. When you are older, make sure you have joint investment accounts, either with your spouse or relatives or at least, you have the nominations in place. “There are at least some hundred thousand crores worth of unclaimed investment dividends with the Government of India. I am sure we don’t want to contribute more to that number. We must make it easy to claim the money that we invest,” he adds.

Create a statement of all your investments, evaluate your financial needs for the year and ensure you are well provided for the cash flow needs. What mostly happens post-retirement is we become financially insecure. That’s why it is important to keep a record of your investments and evaluate your financial needs. Putting things on paper often calms one’s mind. You don’t have to do it more frequently. Once a year is good enough to help you get rid of financial anxiety. 

Review your stocks and mutual funds to ensure that you move out of underperforming funds/stocks and consolidate only the good ones. You must review your investments and check how they are performing. Ideally, every six months or once a year, take a look at it and move out of the poorly performing ones. “This is a great exercise to develop a good investment portfolio over some time. And it is a very simple exercise and nobody needs to be an investment guru to do this,” says Krishnamoorthy.

Check how much money you have in each asset class like real estate, stocks, mutual funds, fixed deposits, life insurance. Too much money in one place could be a risk, so make sure you diversify adequately. As people grow older, we find a lot of them tend to invest a bulk of money in real estate, which is not bad. But keeping too much money in one place may not be a wise option as it could be risky. 

Discuss your investments with your spouse and partner and let your near and dear ones know about them. Also, tell them how they can get the details regarding your investments in case of emergency access. For partners, it is equally important to spend 15 to 20 minutes annually to know about your spouse’s investments and inform them of your own. 

Ensure you have some emergency money easily accessible in a short term FD that is enough to meet at least 6 months’ expenses. This has proved very crucial especially during the pandemic. We need to have some amount of money in places that are accessible to the elderly during times of sudden need.

If you have insurance, ensure that the details updated are current and the premiums are paid well before the due date, otherwise, they lapse. Use an auto-debit mandate to ensure that on the due date the premiums are debited from your bank instead of you having to make the payment manually. If policies aren’t updated, they create a whole lot of problems that are difficult to manage. 

Do not transfer your assets to your children during your life. It must go to them only after death. Your wealth is your power, your right and your respect. Hold on to your wealth during your lifetime. 

Write a simple will to ensure that your instructions on dealing with your investments are clear. All you need to do is declare what you would want to do with your assets after your time, who you want to give what to and get it attested by two dear ones. A will makes this process simpler and less tedious. 

Three ways to plan and manage investments in the retired phase of life

Commit to a plan: Have a plan in place, follow the plan, invest carefully and spend resources judiciously – be it a mutual fund or senior citizen savings scheme or fixed deposit or post office investment or revenue. You must have a plan in place and how it will generate cash flow for you and how you will use it. People who don’t have this plan on paper in some form are those who are always anxious and insecure. 

Ensure health and life risks are well covered: Health forms an important part especially when you are older and health expenses are a primary budgetary concern among most older adults. This could be managed well if you make sure you have adequate insurance covering your health and life risks and you start with it well on time. It’s not advisable for people aged 50 to 60 years to opt for a new life insurance coverage unless they have a steady flow of earnings at that age. However, health insurance is something in which you must invest. Whatever life insurance you’ve taken earlier, make sure you keep paying the premiums on time and keep them active.

Take some risks: While being on the safe side is important, understand that it will also yield you less. Take some risks as per your temperament. You must be comfortable in taking that risk. Taking risks is important if you want the money to serve your long-term needs. Do not take a risk just because somebody else has taken it. First, understand the risk and then go for it as per your needs. 

Must you invest in a retirement home?

Needs are different when you are older, empty nesters need less space and many elderly find it difficult to manage a large space on their own. If you are not pursuing an active job, you need not be in the hustle and bustle of the heart of the city where traffic is high and the air is less clean. You can choose a retirement home in a calm and serene location and live a stress-free life. You may want to have resources like medical and home service which may not be available to you at your independent living setup. Also, you may want to live with like-minded friends of your age in a community set up and get socially engaged.

A reverse mortgage is another reason why you may invest in a retirement home

A reverse mortgage. If you have large assets which you don’t need, you can choose to move to a senior living community and opt for a reverse mortgage on your property. In this case, for the next 20 years, the banker will have your property and in exchange, you will receive an amount monthly. This will either augment your cash flow or give you enough to have a fulfilling life.

These simple ways can help you get rid of financial stress and anxiety post-retirement and add happiness and peace to your silver years.