4 financial measures that will ensure endurance of Retirement funds


4Retirement does not lessen the significance of financial planning and retirement funds made throughout the working years by means of disciplined investments. Post-retirement planning is equally important as any other financial planning.

Here are 4 financial measures that will ensure the longevity of your retirement funds

Invest retirement fund in high yield fixed deposits and debt funds

Usually, retirees are recommended to use their lumpsum retirement proceeds such as gratuity, provident funds, or other retirement schemes to invest in annuities. This pattern of investment instruments yields very low returns almost outpacing the inflation rates.

For the start, estimate short-term financial goals and invest the proceeds of your retirement schemes in high yield bank fixed deposits offered by small finance banks and a few private sector banks. Fixed deposits in these banks are secure as with other banks, as cumulative deposits of up to Rs 5 lakh per customer per bank are covered under the deposit insurance program of DICGC, an RBI subsidiary, in case of a bank failure. Those with higher risk keenness can invest their retirement earnings in short-term debt funds. Debt funds often outdo fixed deposits in terms of returns. The remaining money left after meeting short-term goals can be invested in equity funds based on your risk enthusiasm.

Maintain sufficient contingency fund

The risks arising from an inadequate emergency fund could be higher for the retiree as getting loans to meet financial emergencies would be very tough in the post-retirement phase. Redeeming fixed income investments before their maturity can cost charges. Financial contingencies befalling during a bearish market phase may direct to redeem equity investments at a loss or sub-optimal gains. It is recommended to estimate requisite monthly expenses such as rent, utility bills, grocery, medical bills, insurance premiums, EMIs, etc for at least six months and place that amount in a high yield savings account.

Secure health insurance cover

The old age makes people inclined towards ailments and distress and the significance of having adequate health insurance becomes even more essential. Thus, have an adequate health cover, even if it comes at a higher premium. Also, opt for top-ups from an existing health insurer to cover the deficit following the withdrawal of employer-provided health cover. Besides, the premium levied on top-up health covers would be lower than purchasing an additional health insurance policy.

Continue to remain invested in equities

Equity as an asset class knocks fixed income instruments and inflation by a wide margin over the long term. Hence, instead of shifting your total equity exposure to fixed income products at once, opt for a spaced-out shift. Primarily, ascertain essential monthly expenses and short-term financial goals and then, initiate Systematic Transfer Plan (STP) on your equity funds to sway to ultra-short duration debt funds. Subsequently, activate a systematic withdrawal plan (SWP) in those ultra-short duration debt funds to get monthly cash flows to meet your daily overheads and short term financial goals


Please enter your comment!
Please enter your name here