A few days ago somebody asked on my blog…what happens if a person runs out of money in retirement?

Well I have handled cases where people ran out of money in retirement. In some cases, they had other assets – like a house in South Mumbai – which could be sold and the money could be used. In some cases not only did they run out of cash, but they also ran out of assets.

In one case it was an anguished cry for help by a man with rich nephews read on http://www.subramoney.com/2013/10/reverse-mortgage-story/  

In one case the couple who had run out of money were childless, and he had exhausted his money. Well almost. Who helped? The woman’s nephew had a spare house which he gave to his aunt and uncle. They lived in that house (rent free, even the maintenance was paid by the nephew) and they had money to eat and pay for the medical expenses. Then one day the uncle died. The nephew wanted to sell the house. She went off to a Senior Citizens Home. Suddenly the nephew found that she had Rs. 30L in bank fixed deposits. He did not know about that earlier. Neither did I. So in such cases, you never know the full truth. So the nephew paid the one time donation for the Senior Citizens home and she is paying the regular monthly charges. She is 83 and we are hoping that the 30L Rs. should last her lifetime!

In another case the old man ran out of money and the son was not (is not) in a position to fund the expenses of the Senior Citizens home. The son in law came to me saying ‘My father in law has Rs. 12 lakhs (this was about 8 years ago) and his expenses are Rs. 19,000 per month. I know this will go up and I have no clue what to do. Clearly the daughter and son in law were very well off and could afford to look after the old man. I said take the 12L and mix it with your portfolio. However, tell the old man that his money has been lent out at 20% per annum and hence they are able to afford to pay for his senior citizens home expenses. The 93 year old STILL BELIEVES that his “huge Rs. 12L” is feeding him. The home now charges about Rs. 70000 a month – including diapers, medicines etc. So the daughter says “interest rates have gone up” or “we put some of the money in shares”. However for the past 3 years those lies too have stopped. He is unable to comprehend what is happening. However, clearly he is outliving his money.

We have had such cases in the family too. Death of people who had no money to pay for cremation. Death of people whose family came to the hospital with Rs. 240 to claim the body, and do the cremation. The amount needed was Rs. 26,000. Obviously somebody from the family steps in and picks up the bill.

It is a real tragic story out there and it is very common to see such people. Even though they are still a small minority. We also need to remember that such stories do not come out. If you have such stories, please share them.