Page 29 - Seniors Today -Volume no1
P. 29

the form of provident fund, gratuity etc, an
        illusion gets created that there is lot of money.
        The same is then spent on a lot of unnecessary
        expenses, without considering the long period
        ahead without the regular monthly income.
        While it is absolutely essential to spend on
        oneself, the idea is to strike a right balance
        between excessive indulgence and frugality.
        3.No / Inadequate Medical Insurance
        One of the biggest mistakes is to underesti-
        mate the potential medical expenses and not
        plan for any medical contingencies. The single
        most important element of financial planning
        for senior citizens is to have a sufficiently
        large medical insurance cover. A shortfall in
        medical insurance can put a severe dent in the
        overall retirement corpus. While the appro-
        priate amount will depend on case to case            very nascent stage in India and mostly limited to
        basis, but as a thumb rule a retired couple          a very limited set of families in the society. As an
        should have at least a medical cover in excess       important part of financial planning, it is abso-
        of INR 10 lakhs.                                     lutely imperative for an individual to ensure that
                                                             there is a very clear set out succession plan and all
                                                             the impacted parties should be appropriately kept
        Expensive, illiquid products sold as invest-
        ments                                                informed about the same. This ensures a seamless
        A very common mistake that retired investors         transition of one’s financial legacy.
        are susceptible is to be mis-sold annuity/pen-
        sion schemes packaged together with insur-           Reliance on Family & Friends for Investments
        ance. Such products are not only expensive,          A very common mistake which investors are
        but also very illiquid. Technically, there is no     prone to commit is to rely on family and friends
        need of any sort of life insurance during this       for investments or simply replicate their invest-
        stage of life and hence any product (invest-         ments. One has to understand that every retire-
        ment) being sold under the premise of insur-         ment journey is different and hence cannot follow
        ance should be completely avoided.                   the same path. It is therefore important that one
                                                             seeks qualified professional help with respect to a
                                                             holistic financial planning. While this is relevant
        Rich, but Cash Poor
        As the heading says, a lot of senior citizens ex-    for an investor at any stage of life, this assumes
        perience this problem of being quite wealthy         more importance in the retirement phase as the
        but constrained by low cash levels. This is a        potential to reverse a mistake is quite low during
        result of appropriating a high percentage of         this stage of life.
        the wealth towards illiquid assets. This could       When you know what not to do, the path to suc-
        lead to dependence on children or need to            cess is clear. In the journey of retirement, one has
        dispose of such illiquid assets in distress, both    to ensure that they avoid these mistakes to ensure
        situations which are not desirable. Hence it is      a less bumpy road ahead. In the next edition, we
        absolutely critical to ensure sufficient liquidi-    examine the various investment options suitable
        ty as all times.                                     for retired citizens that help them achieve their
                                                             desired goals.

        Inadequate Succession Planning
        Succession planning, as a concept, is still in a     Happy Investing!!!

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