Covid-19 has given rise to frightening situations. A friend who lives in the US had a harrowing time figuring out how to even reach her parents. Both the parents got infected with covid-19 and had to be hospitalized separately. Being the only child and having no family members in the city where her parents lived, she was at her wit’s end on how to manage things. There were many concerns: apart from her parents’ health, she had to take care of the house and other matters. With both parents in hospital, she also found it difficult to access the medical records that the doctors had been asking for as she had no idea where they were kept.
Such situations, wherein parents and children live in different cities and there is lack of family support, are getting more common now. That’s why, as people age, they should simplify their financial lives and put a thought to some key things. Here are some of them.
Downsize real estate investments
As you grow older, it becomes that much more difficult to manage multiple properties. It is not just about collecting rent but managing issues with the properties is an arduous task.
Most people would scoff at my suggestion of downsizing real estate investments, but those living off rental income should realize that rental yield in India is at 2%, according to various estimates. Even a fixed deposit will give higher returns.
Investors tend to acquire new investments each year rather than reinvesting into existing ones. This leads to investors accumulating a diverse set of products with small amounts invested in each of them. I routinely find senior citizens having a portfolio of 20-30 stocks, seven to eight mutual funds, multiple insurance policies, fixed deposits spread across three-four banks and regular return schemes like post office MIS, PM Vaya Vandana Yojana and maybe pension payouts.
So many investments are difficult to track and may not add to the overall portfolio returns and it is best to reduce the number of investments to a more manageable number.
Give access to family
Not all investment holdings are given electronically and seldom do individuals keep a detailed list of their portfolio holdings. During emergencies, family members have no idea about the individual’s finances, and this is further compounded by the fact that men do not like to share information about family finances even with their spouse.
I came across a case wherein the mother had passed away two years back and the father passed away from covid-19 recently. The family connected with me to know how to find out about the father’s investments. They also found unbanked cheques, dated two years back, pertaining to dividends from shares and also had no idea where the bank locker keys were kept. It is a long haul for the family to get access to the assets, all because the father did not share any information with the children.
While you may not want to give access to financial documents or passwords, you should prepare a list of all investments with some basic details, which can be given to the family, if needed.
Plan Where you’ll live after retirement
No longer are old-age homes or assisted living, as they are called, looked at with disdain. With the changing times, there are senior living communities of very good standard available, which provide excellent living and medical facilities. If you are planning to move to such a facility, you may need to exit from existing property or financial investments. Certainly, you should have a plan in place to be able to do this smoothly.
Look at Estate Planning
Make life easy for your heirs. To do that, have an estate plan in place. Earlier generations lived a difficult life but ensured they left as many assets as possible for their children. Life is too short not to be enjoyed and the current generation is not emotionally attached to real estate. Make the most of your money but write a will to pass on your wealth and possessions to whom you want it to go to.
Before a battle, planning is everything, Once the fighting has begun, it becomes worthless.
Mrin Agarwal is a financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra