Sailing Smoothly Through Sundown Years

At the edges it falls apart, there goes a saying. Planning finances post-retirement is heavily dependent on whether one has done the right things in their active income period. So, if I assume that you have a decent corpus accumulated, which if appropriately invested, can help you live your life comfortably.

I shall focus on the major dos and don’ts of managing finances post retirement

Continue to work as long as you can!

Retirement is not the stoppage of active income, but the stoppage of dependency on it. However, if there is the ability to create income post the retirement age, by all means one should do that. This not only adds more money into the kitty, but also keeps one sane and does not turn one’s mind into a devil’s workshop as the saying goes!

Track your expenses more actively

Now that you have the luxury of time, do track your expenses actively. This would help you to put a quantitative filter on the discretionary and lifestyle expenses. Retirement also opens up a wide arena of pastimes that may be hard on your pocket. Unless sufficient provisioning is done for such expenses in advance, it is better to pick up inexpensive pastimes like reading, watching TV or  penning down your life experiences.

Your retirement corpus is NOT start up capital for your children or grand children

Retirement corpus is called ‘life savings’ for a reason. It’s the result of your continued effort throughout the prime of your life. So it’s critical for you to protect it from everyone, especially your near and dear ones! Yes! It is a fact! So don’t give away this money to support other people’s needs just because you are elder and feel obligated to do so.

Invest your corpus wisely

While you should not be taking too much risks with investments at this age, you must invest wisely. Senior citizens’schemes come handy and if there is still surplus available, you may put into long term FDs spread across a few major banks or invest in direct plans of diversified debt mutual funds. You may have an exposure to equity to the extent of 20-25 per cent of your overall corpus through direct plans of diversified equity mutual funds as it is expected to provide growth that will help you overcome inflation. Avoid chit funds and other private company deposits as they entail high risk of default.

Move into a smaller house

A small house is easy to maintain and would be sufficient in your golden years. You may either selloff or give on rent the bigger house to buy or rent a smaller one. This will be a boost to the retirement corpus or provide you with an inflation linked income in the form of differential rent! Reverse mortgage is an option you may consider to create a steady stream of passive income.

However, it is generally quite less, when compared to monetising it either in terms of sale or rent as described above. You may consider this option if you feel the threat of someone influencing or forcing you to let go of your house in any manner. If your house is under reverse mortgage, even the bank cannot evict you for the rest of your life.

Do opt for health insurance

Once again, during your retirement period, the excuse of ‘I don’t have time.’ is not valid! Therefore, you can have a very healthy lifestyle comprising a good diet, regular exercise and appropriate sleep. You should also budget some money for regular preventive health check-ups.

The most important thing though is to keep a health insurance policy active at all times as a major medical emergency can wipe off your savings in no time! It would be ideal if one buys a personal health insurance policy during one’s youth and carries it on beyond retirement.

Life after 60 can be a fulfilling one provided you have taken all the right steps during your prime. While ensuring financial comfort is one of the foremost things, maintaining good health at the same time can ensure a even better retired life.

The author is Founder and Chief Strategist at  Horus Financial Consultants