Managing your finances during retirement requires the right planning and approach. The problem compounds after retirement because there is no regular income. Essentially there is no scope for any mistake to be recovered. Any wrong financial decision or action can cause financial distress. Moreover, it is almost impossible to recover the losses. So, to avoid such situations, let’s find out three major points you must keep in mind when managing your finances during retirement.

Use The Retirement Corpus Judiciously

The retirement corpus in your account may look big at first sight, but it does not take much time to deplete if not spent judiciously. The reason why it looks big is, for most retirees, this is possibly the first time, they see such a big amount in their account. This tends to create a false sense of abundance. Many seniors spend money on gifts for their grandchildren, changing furniture, or even buying electronic gadgets. You must avoid the temptation. You need to envision your remaining life and explore ways to deploy such a retirement corpus that guarantees financial comfort till you live.

Take The Health Insurance

Expenses on health are one of the major chunks of outflow. While regular medicines can be affordable, hospitalization can be expensive. Adequate health insurance ensures that any medical emergency will be met with your insurance claim. You will not have to dip into your retirement corpus or savings to pay for the hospitalization.

You should also ensure that your insurance provides essential options such as cashless claims, lifetime renewability option, less waiting period, and no capping on a claim for any treatments. The most important thing is the claim process. You should research which insurance companies offer a hassle-free claim process. You do not want to run from post to pillar to claim legitimate medical expenses when needed. If you are unsatisfied with your existing health policy, you can port it to a better one, but you should try to do it before retirement.

Stay Invested

No matter how big your corpus is, inflation consistently works against it. Your corpus can quickly deplete if it does not grow. Hence, you need to remain invested. Money in a savings account earns very little interest. The return on your savings account will not even cover the inflation rate.

There are many schemes by the Government of India as well as banks which help you in investment. These schemes offer the safety of capital and the interest rate that is a little higher than inflation, ensuring that you generate the real rate of return on your investment.

Some attractive investment schemes are the post office monthly income scheme (POMIS), Pradhan Mantri Vaya Vandana Yojana (PMVVY), PPF, fixed deposits by banks, and debt mutual funds. Balanced funds can also be a great choice if you can take a little risk. Finally, financial health is the most important ingredient to a stress-free life in old age. Follow these three steps and live a happy retirement life.

The author is an Independent Financial Journalist