5 Financial Decisions you will regret after retirement

Heard of Regret Iyer? Yes, there is a man who lives in South Bangalore called Regret Iyer! Of course, his parents had named him something else. But he decided to change his name as he ended up receiving the maximum number of regret slips from newspaper and magazine editors. Incidentally this has also been captured by the Limca Book of Records.

Although this may seem like a laughing matter now, you may be tempted to emulate Mr Iyer when you retire. If you are wondering why, it could be mostly because of certain financial decisions you took during your younger years, such as: 

1. Waiting to start investing: Quite a few working professionals feel that they will start saving when they have an income which is large enough to meet their “needs”. This is a bad idea – one must not save what is left out after spending, one should instead spend what is left after saving. Set your investment goals and start working towards them from your very first salary. The earlier you start with your investments, greater is the time you give it to grow and better is your mindset at handling riskier investments that can offer higher returns.
2. Retiring early: Many of us wish to retire early. Most jobs set the retirement age at 60. But you do not have to hang up your boots at this age or earlier. Many jobs allow you to extend your service by at least a couple years, most skilled professionals will be able to use their experience to work freelance even after the age of 60. Do not dip into your retirement savings at 60 – instead continue building it for at least another 5 years, it will make a huge difference to the pension you would be able to draw per month. Of course, you can keep working longer if you are able to.
3. Copying our parents’ investment style: Our parents may have avoided the stock market when they were making their investments. And for good reasons. But the times have changed. Not all alternative investment options carry the same risk. Regulating agencies have become sharper at protecting interests of small investors and there is substantial information available for a lay person to access and understand.  But remember that as you approach your retirement age, you would want to shift to lower risk investments.
4. Not having health insurance: According to data compiled by National Health Profile, only 27% of Indians own a health policy. Presently, room rents charged by decent private hospitals today are no less than that charged by premium hotels. Add to this the cost of consultation, tests and medicine. Imagine how expensive cost of healthcare will be in the future. As one grows older, hospital visits may become more frequent. To dip into one’s retirement nest eggs or borrow money from friends or family members for footing the bills is certainly not desirable. Purchasing health insurance cover when one is younger ensures that premium is lower. One can also seek coverage against a variety of critical illnesses. When one is younger, the chances of suffering from any pre-existing illness that could increase the premium or deny health insurance coverage are also low.
5. Ignoring the need for term insurance: A report published by leading insurance experts places India’s insurance penetration level at 3.42% which is way below the global average of 6.2%. We end up taking life for granted. It is not implausible to find oneself as a senior citizen with financial dependents who are finding it difficult to get work. Or as a senior citizen, who wishes to bequeath a huge sum to one’s inheritors as the sunset of life nears. But in both these cases, purchasing a plan that offers a substantial sum assured which could fulfill needs becomes difficult as a retiree since premiums end up being expensive. The younger one is, the cheaper premium becomes for a term insurance policy that assures of a large sum. One could explore a protection plan such as HDFC Life Click2Protect Life  when one is still young.  

According to a recently conducted research, only 1 in 3 Indians save for retirement. This is a scary statistic as we underestimate how long post retirement life can be. With life expectancy in India increasing, one can easily expect to live 2 to 3 decades post retirement. One may not have a lot of needs during retirement but one may still end up spending quite a bit. Gifts for grandchildren, travelling with friends and maybe even living in a premium retirement home with several facilities would be expensive propositions.   

Therefore, it is important that we take action and formulate a retirement plan when there is still time. As time is fleeting and would pass soon but the sour taste of regret would always stay.