Are equity Markets good for Senior Citizens?
A UN report mentions that the share of older persons aged above 60 in India would increase to nearly 20% in 2050. On top of it, measures to provide social security to the aged people are somewhat lacking in India. Here, every second aged person is concerned about social and financial security. More than one-fourth of the respondents’ financial needs are dependent on children or close relatives.
Due to this, it becomes important for them to plan their finances for a secured old age. Here are a few things that can be followed for a secured retired age.
Because old age stops active income, the elderly must prioritize their needs. It is seen that many parents pay for their children's needs, like wedding etc., from their retirement money. This depletes the money that could’ve been used in times of necessity. A solution to this can be to pay a part of the expense while the remaining can be borne by the children themselves.
Fixed-Return Instruments: It is also advisable to keep the equity exposure low so that the capital doesn’t take a dip due to the sudden changes in the stock market. Fixed income instruments ensure steady cash flow.
Government has one such scheme, the Senior Citizens’ Savings Scheme, that provides a quarterly payout. Under the section 80C of the Income Tax Act, 1961, investment in it also qualifies for tax exemption.
Another small savings scheme is the Post Office Monthly Income Scheme. It has monthly payout and also allows premature withdrawal if required, with a nominal penalty.
These schemes preserve the principal amount and offer assured returns.
Nominees: Updating the nomination details of the accounts ensure that your spouse would easily get the money in your absence.
It is also important to keep all the documents related to the investments nearby for easy access.
The key is to invest in places with assured returns and to avoid risky investments. This should seal you a healthy sum of money for your retirement.