How can seniors invest after their retirement?

Investment is something that we all look forward to regardless of age. Most importantly, we look forward to getting a higher return on investment wherever possible. However, in the case of seniors, the scenario is a bit different. The difference in the financial planning of seniors is because of the following common reasons.

• Their income might not be regular and fixed
• Risk-taking capacity is usually less
• They might require money at frequent intervals

In addition to the reasons mentioned above, there are several other reasons behind the difference in investment after retirement for seniors as compared to their junior counterparts, which tend to vary from one person to another. In this regard, it would undoubtedly be a very good idea to keep a few important strategies in mind before investing.

Take Into Consideration the Risk

It is true that with retirement savings, taking into consideration, the risk factor is a matter of immense importance. It can be hard for retired seniors to tame down their risk appetite at the time when it comes to investing in retirement. It should always be kept in mind that investing in higher-risk instruments can create a difficult situation for seniors since, after retirement, the incomes do not remain fixed. Typically investing in higher-risk profiles can fetch you a great return, but the opposite happening is also equally likely. Thus, it is always recommended to be mindful of the risk while investing after retirement.

Liquidity is the Key

The post-retirement life comes with a lot of changes where the requirements vary. Liquid cash requirements are high, majorly due to medical requirements. Therefore, at the time of investing, liquidity should be taken into consideration. Make sure to invest in instruments or funds that do not have a huge lock-in period. It would be ideal for breaking down the investment into a few liquid funds and a few funds with a short lock-in period like one to three years. This, in turn, would make sure that liquid cash is readily available as and when required to serve the intended purpose of use.

Break the Retirement Investment Down into Five-Year Segments

One of the major challenges at the time of investing after retirement is that no one investment or investment style is able to appropriately address the needs of a '25-30 year' retired life. Therefore, it is ideal for breaking down the investment into five-year segments. Each of the five-year segments, such as 60-65, 65-70, 70-75, etc., has its own unique lifestyle needs, and hence the investment needs also tend to vary. The post-retirement hobbies, wishes, needs, lifestyle, and others usually change during these segments. Thus, it is recommended to plan the investment carefully after analyzing the investment instruments in detail.

Keep in Mind the Inflation

The risk of a declining investment portfolio cannot be overlooked at the time of investing after retirement. However, another risk faced in this regard is running out of money during the retirement phase, majorly due to inflation. It can result in burning the retirement savings much faster than expected if no proper measures of mitigating the same are taken. With the rising inflation rates, it would be appropriate to balance an income-generating portfolio with short-duration bonds or equities in order to mitigate the risk of inflation.

Watch Out for Guaranteed Income Instruments

For seniors, it is always recommended to watch out for a few instruments that offer guaranteed returns for hassle-free life. It is because of the fact that with guaranteed income investments, seniors can rely on it to a great extent.

Opt for Diversified Investment Options

It is always recommended to go for a diversified investment portfolio since it plays a crucial role in reducing the risk of losses. At the time when you have several investments, it is very unlikely that all would go down simultaneously. Thus, even if one investment crashes, the others will make up for the loss, thereby reducing the risk to a significant extent.

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FAQs

What is a good way to earn fixed income from a bulk investment?

• Fixed deposits happen to be the best way to earn a guaranteed fixed income.

What are the tax liabilities for seniors?

• Seniors have a special tax slab that depends on their age which should be considered at the time of investment.

Do fixed deposits offer liquidity?

• Yes, most fixed deposits offer liquidity but always check before investing.