Helping parents do financial planning for retirement

With the increase in longevity and need for financial independence it is now becoming imperative to plan for a second career for people who are nearing retirement. For the vast majority of people, who are at this stage of life sets in quietly, but suddenly,  and few are prepared to deal with its issues. Most people living busy lives during the young and middle age periods may prefer to turn away from, and not consider, the possible realities of their own impending old age.

The most common issue one faces at this stage is the feeling of being financially insecure, making one feel dependent on others even for their basic needs. Often older persons either lack the opportunity and/or the capacity to be as productive as they were. Increasing competition from the younger lot, individual, family and societal mind sets, slowing physical and mental faculties, limited access to resources and lack of awareness of their rights play a significant role in reducing the ability of the elderly to remain financially productive and independent.

We at Samvedna Care recently organized a debate on whether retired senior citizens should plan for a second career at our Senior Activity Centre to discuss this topic. The members had mixed opinions.

Those who were for the topic highlighted the following points in favor of having a second career –

• It keeps one physically and psychologically active and healthy
• It make one economically independent, which in turn enhances our self-esteem
• It keeps one motivated to learn and grow, and keeps them feeling young.

Those against the topic felt –

• Planning  for second career can be challenging and depends on the type of  profession you were in.
• Some felt that if you have planned well for retirement then you may not need to do this.

While concluding the debate, members agreed that economic security and freedom is important at all ages.

We have put 5 ways in which you can help your parent in doing their financial planning when nearing retirement.

1) Make a plan to pay off debts –
Its best to start on this at the earliest, ideally before they retire so that they can begin their retired life stress free.

2) Prepare a budget –
Assess their monthly monetary needs that are required to keep them financially independent.

3) Convert their savings to income –
Re-look at and carefully plan their savings and investments, after weighing risks and returns, so that they have the income they need as per the budget you have planned. It may be useful to consult a financial advisor for this.

4) Apply for government benefits –
The government offers many benefits to senior citizens for different things such as travel, investments etc. Its a good idea to research and make a list of benefits that your parents can avail.

5) Review their insurance needs –
Our insurance needs change with age. While a person with a large number of dependents may need more life insurance others may need more health or critical illness insurance.

Financial independence is essential for happiness and a good quality life. By taking a few steps at the right time, this goal can be achieved with success!