Living With A Small Corpus

Retirement often stares at us if we are not cautious enough of its repercussions because the corpus accumulated often decides how comfortable our life would be. In the last two decades, medical advancement has improved our life expectancy to over 80 years. However, the retirement age has remained the same, putting a strain on the resources.

We often end up with a small corpus owing to improper planning, late investing, financial crises, or unforeseen circumstances. We still have to tackle the growing inflation. Hence, despite a small corpus, with proper care, we can still lead a happy retirement life. Here’s how.

Cut Unwanted Expenses

It would be meaningful if we stick to only basic expenses and ignore the things, which are not really important. Let’s make a list of expenses that can be reduced. Medical insurance is a critical expense that cannot be ignored in the old age.

Don’t Leave Inheritance

With a small amount in hand, it would not be wise to leave anything for our heirs, who may not need it. It is best to make good use of this money for our future.

Make Your Portfolio Aggressive

Since we have lost precious time to save for our retirement, it is important to tweak our investment strategy and make up for the lost time. Our existing portfolio can be made aggressive by increasing the allocation to equity. There are two things to keep in mind - the risk will be high, and there is a good probability of getting superior returns. Both can be managed if our money in equity stays invested for a longer period of time.

We can increase the withdrawal from debt and decrease from equity but only up to a certain period of time. This will automatically increase our allocation in equity and generate higher returns. Another feasible option would be to shift certain allocations from debt to equity without hampering the withdrawal. However, we must avoid investing in extremely risky equity like small-cap or sectoral bets, in the lure of higher returns. We must invest so that it will proportionately play out the risk of the portfolio and generate higher returns.

Please consult a financial advisor to zero down the right proportion as per the requirement and risk-taking capabilities.

Earn From Passion

It is possible to make money by doing what we love. We just have to pick one feasible hobby and go for it. We can work as a consultant, host a seminar or workshop, create an online course, YouTube videos, start teaching, write a blog, create a podcast, etc. There are tons of ways where we can blend our passion and our experience to earn from it. This will not only help us to take care of our monthly expenses but will also help the retirement corpus to stay invested.

The Last Resort

There is a possibility that despite everything we may be on the verge of running out of money. At such times, shifting to a Tier 3 city after selling our property could be an option. This will not only help us in generating some money but will also help us in downsizing our monthly bills and expenses. This should be done only if there is no way out. Another option could be to move to a rental property. Generally, the rental yields are very low and there could be a good scope to monetise the property.

The author is Director, Ventura Securities Ltd