Are you over 50 and have been contemplating and just been made aware of the advantages of financial planning? Has a lack of accessibility to proper information stopped you from financial planning all these years? This blog will tell you that it’s possible to gain financial freedom to an extent even after five decades of your life.
Starting Late Does Not Mean You Can Never Start
Here are some proactive steps you can take to secure a comfortable and financially secure retirement.
You need to look at least five areas:
- Retirement Planning
- Income Generation
- Healthcare planning
- Debt Management
- Estate Planning
Retirement Planning
- Consider investing in a Public Provident Fund or a National Pension Scheme as the Indian government allows higher contributions to tax-advantaged retirement plans for people above 50. This approach can help bridge the gap created due to a lack of financial planning in the younger days.
- Schemes such as the Senior Citizen Savings Scheme offer attractive interest rates especially designed for generating income after retirement.
- A reverse mortgage allows people to access a portion of the value of their home as a source of income while retaining ownership. However, as a financial coach, I would recommend that you understand the terms and implications of this approach carefully.
Income Generation
- To create a steady stream of income, consider investing in low-risk and dividend-paying mutual funds. You can use the advice of a financial consultant to create a suitable portfolio based on your income needs and risk tolerance.
- If you own more than one property, you could consider renting one of them to earn a regular source of income. You need to ensure consistent effort in managing rental properties and potential maintenance costs.
Debt Management
- If you have impending debts that need to be cleared, make sure to clear them as they might pile up later. So, pay off any high-interest debts like personal loans or credit card debts. This approach will help reduce future financial burdens.
- Another way to free up capital or pay off debts is by downsizing to a smaller and more manageable home.
Healthcare Planning
- Explore healthcare options designed to reduce your financial burden as healthcare costs rise.
- Look for critical illness insurance plans that can provide a financial safety net to support you during major illnesses.
Estate Planning
- Draft a will to distribute your assets wisely and avoid confusion and disputes among family members.
- Ensure that nominees are updated in all investment accounts and bank accounts to facilitate a proper transfer of assets.
People over the age of 50 usually have investment choices that reflect a lower risk tolerance than younger investors. However, one may still require professional advice, which is why it is necessary to seek consultation from a financial expert.
FAQs
1. What can I do to plan for retirement after crossing 50?
You can take a few of these steps:
- Explore Public Provident Funds and National Pension Schemes to help you catch up on retirement savings.
- Focus on clearing any debts.
- Invest in low-risk, dividend-paying mutual funds
- Rent out a property to generate regular income
- Invest in the Senior Citizens Savings Scheme with better interest rates
These are just a few ways to plan for retirement. However, seek professional advice from a financial consultant to help you identify appropriate financial plans suitable to you.
2. Do I need critical illness insurance in addition to health insurance?
This depends on what you can afford and other factors as well. Medical insurance covers hospitalization, surgeries, doctor visits, and medications associated with various illnesses. On the other hand, critical illness insurance is designed to pay a lump sum amount upon the diagnosis of a critical illness like a stroke, cancer, or a heart attack. Therefore, you need to consider which of the two you need the most or whether you need both.
Medical insurance cannot cover everything while a critical illness insurance plan can help with out-of-pocket expenses for advanced treatments. So, if you have significant emergency funds and savings, you can manage the financial impact of a critical illness without a (CI) Critical Illness Insurance Plan. However, if you have a family then you can seek professional advice for acquiring both medical as well as CI plans.
