Investment after Retirement – Pros and Cons

The earning class normally invests a part of their income for their own future (post retirement). There are many strategies that one may be willing to choose in order to lead a secured retired life. On the contrary there could be many others who for some reason never got a chance to save for later (retirement) due to critical situation. They have less to no savings that can secure their retirement lives. This article is for those of them who have a heart to begin their savings when they have just retired from their work life.

Pointers

Before investing at an old age one needs to clearly define the following

  1. Present financial strength
  2. Current and future needs
  3. Risk tolerance

All the above 3 points are critical before choosing the investment option. At an older age one cannot take high risk or on the other hand since all your obligations and duties have been met, may be this is the time one can take high risk. A clear vision with respect to risk is imperative and future needs should include all medical issues that could be anticipated. But the most important is to ascertain what kind of bank balance is available and how much of that can be disposable into the investments.

Investment options after retirement

  1. Monthly Income Plans

These are high return yielding investment plans which are linked to mutual funds. These are investment options with a small percentage being invested in equities. The dividends earned through this are tax free; however, the investment is subject to market risk.

  1. Fixed Deposits

Fixed deposits are offered by several banks and certain trusts where an individual is expected to deposit a quantum of money and interest will be received on an annual basis on these deposits. The interest rate is usually low and corroborates to the phrase ‘low risk low return’

  1. Income Annuities

Income annuities help in converting funds into income as soon as one initiates the policy. Income annuities once purchased will provide the buyer with regular income in return for the purchase price. The benefit of income annuity is that for as long as one lives they will be assured of regular monthly income.

 

 

Benefits of Investing After Retirement

  1. No major obligations – to pay tuition fee or mortgaged loans as in most cases this would have been done with by the time a person retires
  2. With enough savings already done a portion of it can be used to take high risks as in the stock markets.
  3. Enables one to decide on an income generating investment plan which will work till the end of their lives

Concerns of Investing After Retirement

  1. Medical issues – Anticipated medical issues may weigh down on the risk taking ability of an individual after retirement.
  2. Support the spouse on the death of the other – Husbands and wives at an old age will want to secure their better half from penury in their absence and hence will take calculated risks in investment.

It is clear that investment is independent of age as there is one option or another that will suit any age group in reaching their goals.

Photo Credit: kiplinger.com

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