As you age, efficient money management is vital. It prevents wasteful spending, keeps a close eye on your expenses, and budget surpluses and shortfalls. The objective is to reduce financial risks as much as possible by curtailing unnecessary costs and ensuring the money is used wisely; for instance, you could review your investment portfolio, insurance needs, etc. Here are some tips to help you keep track and spend your money wisely.

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Make a List of Expenses, Investments

A list of your spending heads and investments will give an idea of your spending. The list could include your investments in mutual funds, life insurance, real estate, health insurance, shares, etc. It’s important to know what and where you own the assets. Also, consider your anticipated income from pension, rental income, annuity plans, etc. Finally, create a realistic retirement cash flow table considering all these financial instruments. Seek professional help if required.

Don’t Hurry In Cost-Cutting

Reducing investment risks is desirable, but you should not rid yourself of your potential high-growth assets for the sake of reducing expenses. Otherwise, you will regret it for the rest of your life. Remember that your tax-adjusted returns post-retirement should match or be better than inflation. Create a prudent allocation plan for the long term, and don’t fret over short-term variations. Keeping the balance on your regular and long-term needs is the key.

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Plan Strategically

Plan your finances strategically. For instance, consider life expectancy, projected returns, inflation, and present and future income to ensure regular cash flows. You should also plan withdrawals for possible vacations, festivals and ceremonies so you don’t overshoot the budget. A poorly designed plan can get you in trouble, so aim to preserve your retirement corpus as much as possible and restrict withdrawals. Keep an eye on inflation; it is the biggest threat to your corpus. Ensure you have enough cash flows to absorb a 5 per cent annual inflation rate.

Medical Insurance

In your senior years, you will probably see an increase in medical costs. So, you should get health insurance if you don’t have it yet. Consider all the pros and cons before buying a health plan; if a floating plan is too costly, get separate plans for you and your partner. Never accept a subpar insurance provider. The insurers’ settlement ratios are also crucial to consider.

For example, if a 65-year-old with pre-existing diseases like diabetes or hypertension needs a Rs 5 lakh cover, they will need to spend Rs 50,000 annually on premiums. Alternatively, you could set aside a portion of your corpus in arbitrage or liquid funds, which provide 6-7 per cent annually for medical emergencies.