Sushil (57), a regular reader of goodmoneying, contacted me last week for financial planning of his son Vikram. Vikram has recently joined a Multinational firm as a product manager and Sushil wanted him to lead a structured financial life from the start.
To this, Sushil replied that financial planning is for young India. They have the money and time frame required to plan, “hum to apni zindagi jee chuke” (We have already lived our life).
But even after such feeling, still he had lot many queries which he kept on asking in between my discussion with Vikram. Like – Should he continue or surrender the insurance policies? what is the taxation on the pension plans, what mutual funds would suit a retired profile, how can he generate monthly income etc.
Why Retirees and Pre retirees avoid financial planning?
- No Goals –
It is general view that financial planning is a goal based exercise, which actually is true, but definition of goals is something where the confusion lies in. People feel that goal is something fixed and one-time event (Like buying car, house, vacation, saving towards retirement, children education etc.).
Read : How to prioritize goals?
- No Long term Horizon –
This is one of the biggest misconceptions among retirees that financial planning is for those having long term horizon, and since retirees can’t have such a long horizon, thus they avoid this approach.
Also Read: Scarcity Mindset – Why it is difficult to think long term?
- Growth targeted Investments –
Nearing Retirement or Retirees feel that financial planning is all about investing to make money grow, and they are not wrong in assuming the same. When they see around, products are being sold with a return pitch only. Even financial planning is being sold with a pitch to make your money grow.
- Behavior biases leads reluctance to change –
Financial planning does not only involve making new investments, but it may also require you to come out of non-suitable investments. Here the behavioral biases come into the scene, and the major being the Sunk Cost fallacy.
- Fee Fever –
When in your whole working life you have taken all financial services for “FREE” and even got some part of commission cut back from the agent you have dealt with, it is quite natural to find difficulty in paying the FEE to the professional.
This fee fever is the reason which makes the retired people more prone to misselling, as they were sold with products that are good for the seller. Emotional buying also happens when seller convince them to invest in the name of grandchildren.
What should retirees do to overcome these misconceptions and behavior blocks?
First and foremost is the acceptance from heart that you require financial planning and this structure would be of help to you. No doctor can cure you if you don’t accept that you are unwell.
Take help of professionals. Nowadays it is not difficult to figure out the difference between sellers and advisors. Approach a SEBI registered Investment advisor with your queries, and be ready to pay fee to the professionals, as they do not work for FREE.
Conclusion:
This is a wrong notion that financial planning is only for the young, everyone at any age who wants to be organized and structured in financial life requires financial planning.
The Sooner you realize the importance of financial planning, the better you will make your financial future. It’s not about savings or investments; it’s about enjoying the life that you have always aspired for.
What is your view on financial Planning for retirees? Do you agree with me that Post-retirement financial planning is as important as pre-retirement planning? Share your views in the comments section.
DEAR,MANIKARANJEE I AM ALSO RETIRING NEXT YEAR FROM INDIANOIL,PANIPAT AND MY SON HAS JOINED A MULTINATIONAL CO. IN BENGALURU JUST AS THE CASE QUOTED BY YOU.I WOULD LIKE TO CONSULT YOU FOR PLANNING MY INVESTMENTS IN ORDER TO GENERATE INCOME WITH SAFETY OF CAPITAL.PLEASE LET ME KNOW YOUR CHARGES FOR VARIOUS CONSULTATIONS FOR ME AS WELL AS MY SON WHO WOULD INVEST WITH OBJECTIVE OF MULTIPLYING HIS INVESTMENT THROUGH GROWTH.
ACHINTYA MUKHERJEA,BTECH(MECH)&MBA(FINANCE),AGE-59YRS
Sure Sir. Will mail you the details.
sir can you please suggest some investment options that can be considered after retirement.
No specific Investment options for retirees. Products are same, only the usage gets changed after retirement. They need more of a structure and behavioral balance than Investments products.
Hi
Could you please tell the charges via mail to me for retirement planning. Is it requiring face to face or via mail? My self working with private limited company & my age is 48 years.
Regards
Rajesh shah
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