Mahesh Pai explains various problems faced by senior citizens in the country and the importance of financial planning before one’s retirement
The beauty of life is that every person’s life is the same from a broader perspective – infancy, childhood, adolescence, adulthood and old age. Even though it all looks the same for all but as you narrow down the perception, every life is different to its core. The elderly population in India is one of the fastest-growing in the world. At present, India is a country with the second-largest global population of ageing citizens. Living longer means having a longer retirement period. The elderly also face a lot of financial discomfort during their retirement, as their retirement fund cannot cope up with inflation.
So what are the problems faced by these people?
1. Lack of Income
When you have money coming from a job or business, you have a sense of security. The survey found that the financial impact on the elderly were mainly due to loss of family income, loss of business / professional income, heavy medical expenses and inflation. Senior citizens who had rentals coming in were also in a bad state as taking care of the property and remembering every single aspect which need to be taken care of became difficult with old age.
2. Asset Rich, Cash Poor
Senior citizens have created a lot of fixed assets over a period of time. Real estate was a very popular form of investment back then but then what do they do with it now? Most of the time, the elderly population don’t have enough liquid cash and won’t even be ready to sell off these properties due to the emotional attachment that they have with it. Old age is supposed to be stress free and living out all life’s earnings while not preserving them until death. Of course, a part of it can be passed on to the next generation but how would all of that be possible without an effective financial plan?
3. Variable Income
In a country like India only a few people have planned for retirement from the start and have a perfect balance between fixed assets and income generating assets. This gives them the freedom to live a decent life but these income generating assets give variable income. This income is not guaranteed nor has a consistency of being the same amount every month. During covid, a lot of people suffered because of this as they didn’t get their rent, and received lesser dividends because the equity market crashed. So when you have a definite goal you should also have a definite source of income. Make sure your investments are in a place where you have safety and growth at the same time.
4. Rising Healthcare Costs
The rising costs of medical insurance and medical care can easily affect a senior’s finances. With lack of medical insurance or expensive premiums for senior citizens, health care costs have gotten expensive in the country. Unlike other countries, India doesn’t provide free healthcare due to its massive population but an effective and early financial planning can help to cut down these future risks with right methods and strategies.
5. Lack of Companionship
Most senior citizens who probably live alone suffer due to lack of companionship. Older adults may find themselves at a loss when a life partner passes away, particularly if the spouse was responsible for handling all of the household’s financial matters, hence these people should always have a financial advisor. Also, developing a strong bond with older parents and involving them in your life could be quite beneficial for all.
6. Increase in daily living expenses
Statistics indicate that up to 91 percent of older adults don’t have a pension or savings to use as resources. Most of them rely on their children to take care of them in their old age without considering that their children may not be in the best financial position or have other responsibilities that need immediate attention. Some seniors have never given retirement planning much thought, while others may have made poor investment choices that didn’t yield as expected. With current inflation rate, the daily expense for any individual has shot up.
7. Increasing Scams
Many older adults are a target for these scams are they believe a lot in people and aren’t aware much of technology and how it could be used to steal from them. To reduce these risks it is always better to have a financial advisor handy incase of any suspicious activity and safeguard them and their finances.
Retirement is supposed to be a period of joy and relaxation for senior citizens or even for those who opt for early retirement, but financial challenges are spoiling that dream for many. Based on a study, more than a third of the working population haven’t yet started saving for retirement, the concept of YOLO (you live only once) has severely impacted today’s generation. The ones above 50s have invested heavily in fixed assets which is giving them a cash crunch in many ways.
Get the right advice and find better investment options which will give liquidity options and safeguard your future. Saving for retirement at an early age has a lot of benefits especially in a country like India. You can take a loan for any financial goal in your life but not for retirement, take financially smart decisions today.
It is never too late to start planning, even if you are already a senior citizen, get in touch a trustworthy consultant who will help you to plan your finances in the right manner.
The writer is an investment consultant and business coach. Email: mahesh@maheshpai.in
