It’s not ghosts, golems or signs of impending death that scares retirees. It’s the sweeping change in their lifestyle that gives them a fright.
Retirees break into a sweat when their regular flow of income stops but expenses don’t. Expenditure never turns old, in fact it only rises with time. Moreover, old age ushers in a period of rising medical expenses. Currently, it’s the generation of baby boomers in their retirement age.
Here are some things that keep retirees awake at night. Read on to find out what they are and what retirees can do to frighten those scares away.
Bonus Read: Invest Young, Retire Early
Medical troubles pose the biggest hazard to the finances of retirees. More than the pain of physical ailment, it’s the worry over the expenses that rattles the old bones. If one wants good medical attention, private hospitals are the answer. Medical facilities aided by the government are affordable but might lack quality. Hence, most retirees at a delicate age do not prefer visiting government facilities. This concern sometimes adds to their ailments.
So what’s the solution? Medical Insurance. We have time and again emphasised the need to invest in a kickass Health Insurance Plan. It’ll have your back through and through. An important thing to keep in mind with Health Insurance plans is to tweak it on the go. You might want to add riders to it to suit your retirement days. Investing early in a good Health Insurance plan will cost you less, whereas getting one at an older age will result in bigger premiums.
When retirees opt for a Health Insurance plan they must be careful to look at the ailments covered. Chronic illnesses are more prevalent in old age and hence they must be covered by your Health Insurance plan. Other than that if the policy covers everyday medical expenses, it’s an additional advantage.
Economic cycles follow their own heart. Periods of growth can be followed by recession or inflation. Retirees have nothing to worry about till their investments are in tandem with the economic scenario. But no amount of planning can bring absolute security.
When those are enjoying retirement now had started investing back in the younger days, all they could factor in was the rising cost of living. It’ not really possible to predict economic behaviour for the next 20 years. Changes are bound to happen. It’s these very changes that freak retirees out. What if their savings run out sooner-than-expected or what if they lose their money to a financial crash? Fear is doubled for those retirees who haven’t been investing for retirement responsibly. They are more fearful because they might not have much and this could derail life plans for their old age.
Recession and periods of inflation are the most common economic phenomena that every retiree should look at. Retirees lose out a lot in interest money if they cash out their long running investments during recession.
What’s the solution? The solution starts with investing diligently. Instead of investing in one plan, spread out your money across many plans. Make sure you are covered on all fronts. Instead of a single investment, make sure you have a diversified portfolio. Other than bonds, stocks and FDs also invest in real estate. Real estate provides security like no other investment option. This asset will also survive all kinds of economic downturns.
A very valid fear. Today, with innovations in the medical industry, the average lifespan of an individual has gone up. Many retirees do not factor this when planning for their retirement. They save up estimating they’d live a certain years. But these things cannot be determined.
Hence, the solution is to be optimistic and plan for a long life ahead. This way you are covered for good. Outliving your money is a fear bigger than death. How long should you plan for?
The answer is to save and invest thinking that you’ll live a 100 years. That won’t be enough. Once you retire, tighten your purse strings. Start living conservatively. In spite of all the right moves, unexpected expenses can play havoc on your finance. So always be cautious.
Along with their own expenses, retirees often give gifts to their children and grandchildren. Make sure these gifts don’t drain out finances. The solution is to plan ahead and spend wisely. With these two things taken care of, retirees can rest easy.
Listed below are a few things that can surprise retirees in their chill-out days. Being aware of these can help them plan better.
Bonus Read: Don’t Just Save, Invest
Using Up Savings
We Indians are taught to value savings more than spending. Hence, retirees might find it difficult to withdraw funds from their nest eggs after retirement. The money represents years of sacrifice and hard work. To see that amount depleting in old age is not a pleasant sight. This is good in a way. This will make retirees careful while spending money. No worries about going broke.
Don’t Stop Investing
Many people are of the notion that retirees don’t need to make investments. Well, that’s not true. If you are worried about your money running out then you should continue investing post retirement as well. All the money you get from your retirement savings will make good seed money. In retirement, you don’t have to go for long-term investments. Invest your money for short periods of time. Also, don’t invest all your money. You need to maintain some liquidity.
Relying Blindly On Your Health Insurance Plan
A Health Insurance Plan is designed to help meet your medical needs in retirement. But even the most comprehensive plan won’t cover everything. You need to keep ready cash to meet small medical needs. After all, it takes time to claim insurance. Having some money on hand will allow you to meet your medical expenses immediately.
Find A Job
You though retirement means living out the golden days on a rocking chair? It definitely sounds nice, but after years of hard work, you’ll find it extremely difficult to spend your days on a chair. With nothing to do, many retirees find themselves slipping into depression. The solution is to not stop working. You don’t have to look for a tough job. Something simple to spend your time will do. Volunteer for NGO work, take tuition classes for children etc. There are many job options for retirees. It doesn’t necessarily need to be for money, just something fun to keep you active and occupied.
Lack Of Independence
People often draw parallels between old people and kids. This is due to lack of independence. Aging is not an easy process. You won’t be able to physically stress yourself as much as you could in your younger days. Your body will demand a lot of rest. Hence, you might find some daily tasks, such as cooking and washing, becoming a grind. Be prepared for such contingencies. You can plan ahead and get domestic help. You can even move to an old age home. You get company as well as people to help you with your work.
Bonus Read: How Important Is A Well-Diversified Portfolio?
Whether you are approaching retirement or are already there, we have a host of investment options for you.