Retirement costs that people ignore/ underestimate
Most people – including 34 year old bloggers underestimate the amount of money needed for retirement. This is also because they may not have seen anybody struggling with their finances in their 80s or even 70s. Lets look at some of them:
- Housing: In case you are living in a cold climate like Delhi, you may want to a warmer climate for the winters. How will you manage that? Will you buy another house say in Mumbai or Chennai where you can stay in winter?
- Medical Premium will keep going up and at some specific age, the cover itself will not be available. Also the medications that have to be done at home are anyway not covered by mediclaim.
- Healthcare for senior citizens is not easily available and there is a huge shortage of hospital beds. So availability of good medical care at a reasonable price will increasingly become a challenge.
- Taxes: Many senior citizens have a very poorly managed portfolio. Bank interest are the WORST kind of income on which to pay Income tax. However, shifting to debt and balanced funds can help – but you need a good IFA / CA to help you in such matters.
- Food: Most old age homes (I will be living in one) have a good range of food available, but you will not be able to control the pricing – your eating less or more will not change what you pay for the food. If you are living on your own you will have to make sure that you are not eating out at expensive places.
- Emergencies: right from medical, plumbing, electrical – all services are getting more expensive, you need to provide for these too.
- Entertainment: Suddenly at 58 you are unemployed and perhaps unemployable -with huge amount of time on your hands. So you will look for entertainment – movies, travel, what have you. These things are not inexpensive. Needs a lot of planning and executing expertise.
Krish
Recent Ballarpur debt default and reputed fund exposure and subsequent suffering of unit holders is a classic case. This throws lot of questions from fund manager appointment to inside processes of buying the company issued bonds. Reading the facts, being non financial professional, I would have not bought the issued debt.
Surprising, Subra won’t write an article either on fund house or on defaulter. One must realise that investment collapse would hurt senior citizens health wise than anyone else. We have seen enough stories of corporate defaults/bonds and subsequent suffering of debt MFs year after year.
Every senior citizen submits 15G/H, TDS is nominal. These days IT processing of refund is very quick. Even 10% TDS would be returned back quickly if one files the returns. FDs and Post office schemes are OK for Senior Citizens as most of the interest earned would be much below the threshold of IT. I have not seen any senior citizens who are earning more than 10 L/year on interest cum pension. If someone earning 3-4 lacs interest income and he is allowed to submit 15G/H, I don’t see it as big issue that he invested in FDs rather than MF debt.
Given the health shocks that senior citizens receive if any investment collapse and it is guaranteed that one would not receive honest advise from available space (lack of knowledge, crookedness, alliance etc..) at least in India, the chances of FD investment giving peace of mind is much greater than MF debt.
c j gopinath
Hey krish.
Read point no 4 carefully.
He said ” you need good IFA/CA to manage MF investments”.
and what ur view on other 6 points
Krish
@Gopinath, what am saying is chances of finding honest IFA/CA in India is nil.
Swapnil
Honest IFA is an Oxymoron.