Moneylife Foundation held an exclusive workshop for senior citizens on “Planning Your Money-life Post-retirement” on 14 May 2014 at the Moneylife Knowledge Centre. The session was conducted by Sucheta Dalal and Debashis Basu, Trustees of Moneylife Foundation.
Sucheta Dalal, managing editor of Moneylife, began the session by emphasising on how important safety, security and financial independence are for the elderly with the changing times. Ms Dalal took the attention of the audience on the increasing number of Ponzi schemes in the country which are more likely to con the elderly, as they form an easy target for the sales agent. According to the U.S. Federal Trade Commission, “80% of scam victims in the US are over 65”, which is a matter of concern, warning them to beware and distinguish purchasing consumer products from financial products.
She suggests the use of the Moneylife Insurance Helpline, Disha- financial counselling or Abhay promoted by Bank of India for assistance on choosing the best insurance product and to avoid being financially conned.
Ms Dalal further put light on the statutory provisions such as the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 which provides legal protection to senior citizens. Another important but less know act. The Married Woman Property (MWP) Act allows an individual to buy a policy for himself under the Act and create a trust for the same. The welfare of wife and children can be protected as MWP insurance policy is free from creditors and court attachments. Even the Special Marriage Act, 1954 is an important legislation which may act as a family certificate making any legal work hassle-free.
She ended by giving a brief introduction on estate planning such as Wills, Trust, gift, insurance, nomination, etc and the issues surrounding them. Getting a Will right is crucial if disputes between heirs over legacy are to be avoided. “Nominations make things easier, but it’s important that people observe basic financial hygiene and keep updating their nominations” says Ms Dalal.
In his session, Mr Debashis Basu, editor and publisher of Moneylife, started by explaining the many unknowns surrounding a person’s life before and after retirement such as “How much to save for retirement?”, “Where to invest?”, “How long should the savings last?”, “Expected Return of the portfolio?” etc. All these questions were explained in detail making the mindboggling financial retirement savings simple and easy to understand in the seminar. It’s important to save regularly to deal with big expenses such as education for children and more importantly for retirement. Thus, it’s important to spread risks and invest smartly. “It’s important to start saving as early as possible in order to save as much as possible for to create a corpus that will last 25-30 years post- retirement” says Mr Basu.
In order to answer one of the most important questions, “How much is enough?”, it is important to define your retirement, set target for savings and save towards it, said Mr Basu. Mr Basu suggests the use of the financial planning calculators available on the Moneylife Savers website—savers.moneylife.in/calculators.html , to help make the number-crunching easier. An ideal asset-mix would depend on the age and the number of dependents of the person.
He further emphasised on the new concept available for the “asset rich-but-cash poor” elderly called reverse mortgage. It is an agreement with a bank or a housing finance company, where they value your property and pay commensurate amount to you monthly. This amount can cater to your expenses. In case your legal heirs want the house to go to them, they can repay the amount. Or else, the bank sells your property, takes its money back, and pays the rest to your legal heirs. There are various reverse mortgage-enabled lifetime annuity plans such as- life annuity without return of purchase price or the amount spent to buy the annuity plan; life annuity with return of purchase price, which will be used to buy annuity for the spouse on death of the primary borrower; and life annuity with increase at a simple rate of 5% per annum and return of purchase price.
The session was ended with an interactive session of Q&A with the audience having all their doubts cleared.