After 60, your regular income may stop, but expenses won’t
Financial practices after you turn 60 is as important as being financial prudent when you are in your 20s or 30s
Following the right financial practices after you turn 60 is as important as being financial prudent when you are in your 20s or 30s. On retirement, people generally cease to get a regular income, other than when they earn a rental income or receive a pension. It becomes all the more important to be careful when dealing with money and follow the right budgeting. Here are some tips which people in their 60s can follow to lead a financially easy life.
Look for additional income sources:
Since you have no regular income, you should consider various ways of boosting the family income. In today’s hitech world, it is possible to earn even after retirement. You can consider taking up freelance assignments in your area of interest, which can give you income. You can also consider joining a part time job or join as a guest lecturer in a nearby college. If you have excess corpus which can be invested, consider a risk free business, which can give you additional cash flow.
Watch your expenses
It is usually recommended to watch your expense levels in the absence of a regular income to support you. Reduce expenses on various heads. For example, you may not incur expenses on children if they have already been married. You may also not incur regular transport expenses to work or may cut down on eating out due to health reasons. However, one area where expenses can possibly shoot up is on medicines. If you wish to lead a lifestyle which is the same as it was before retirement, you should have sufficient retirement corpus to fund the same.
smart options fund expenses
Medical expenses are one of the big expenses during old age. You must have sufficient health insurance in place to meet any hospitalisation expenses.
Parents are usually covered under the group insurance cover provided by their child’s employer. If you do not have such a health cover, you must buy one immediately, as most health insurance companies have an upper limit on the entry age. You can consider health insurance plans from nationalised banks, which are relatively less expensive. To meet your regular expenses on medical bills and tests, you can consider purchasing health cards which are offered by independent companies or hospitals. This can get you discounts on your purchases.
pay off the debt
Ideally, you should be debt-free before you retire. However, if this has not been the case, then you should immediately look at paying off liabilities when you are in your 60s. Eliminating debt from your balance sheet can help in boosting your monthly cash flows considerably. Use any windfalls to pay off this debt.
you must Have an emergency corpus
When you are in your 60s, you must ideally have an emergency corpus which is equal to at least 12 to 18 months of expenses. This emergency corpus can be invested in investments which can be easily liquidated at short notice.
cost-effective optionsto fund emergencies
Sometimes, the emergency corpus that you have may not be sufficient to meet the expenses. Or, worse still, you may not have any corpus for emergencies. In such a case, you will need to look at alternative options to raise funds to meet the emergency need.
Taking a loan against fixed deposits is a cost-effective option, where you will need to pay only two per cent above the fixed deposit interest rate that you earn. Further, this is a quick and easy means of raising money. Similarly, you can raise money against your Public Provident Fund balance. This comes with certain stipulations regarding the time that you can avail this and the amount. Nevertheless, it can work out to be a less expensive option at only two per cent above the PPF interest rate. However, you can raise such loans only if you have invested in these assets.
Otherwise, you can look at taking personal loans from banks. This works out to be costlier. Some banks offer concession in interest rate and/or terms for senior citizens.
Another option that you can consider is the reverse mortgage. If you own a property, you can unlock the value of this property by availing this scheme and mortgaging the property with the bank. You can continue to own the property and stay in it, while receiving an annuity payment, along with a lumpsum amount from the bank, which could help you meet the retirement needs.
(The writer is the CEO of BankBazaar.com)
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