The punch line of a commercial video selling a pension plan says, “When you have planned well, it shows!” The video shows a couple walking on the beach, hand in hand, as waves lapped at their feet; there is a serene smile on the face of the elderly gentleman who turns and looks at his wife, who is happy and beaming at him.

There are several variations to this theme from companies that seek to sell a raft of products through their commercials, like assisted living homes, pension products, Bonds and FDs, health and wellness plans, etc.

All these advertisements show retirees who seem to have the money to live comfortably and even indulge in their whims. The reality is far more sobering. While people save for their retirement, most people do not have sufficient funds for a comfortable retirement.

For a long time, priority has been given to other goals like homes, vacations, lifestyle, vehicles, etc. In fact, people withdraw money meant for their retirement, like Employees Provident Fund (EPF) and Public Provident Fund (PPF), for various needs like home, medical, education and even requirements, like a vacation!

Retirement as a goal gets serious consideration by most people only when they have reached their mid to late 40s. The remaining time is not enough to accumulate a good enough retirement corpus to last 30 years or more.

That is why a good percentage of the population retire with insufficient funds. However, not much is written or discussed about such people and how they will manage their second innings. What such people can do is the subject matter of this article.

ALSO READ: Time To Kickstart Or Revisit Your Financial Planning Is Now

a) Focus on Expenses – If the corpus accumulated is insufficient, one needs to trim down the expenses. That can be done in many ways. One way is to clinically prune unwanted expenses and reduce others wherever possible. For instance, costly vacations can be avoided and local ones can replace them.

b) Relocate to a cheaper place – Big cities tend to be far more expensive than smaller towns. Relocating there could greatly reduce rentals and general living costs. This would mean leaving a known place, people and ecosystem for a new location, which can be unnerving. But, this could be one good way to pare the burn rate in retirement.

c) Work – If possible, one should seek employment that can at least cover the basic expenses so that one need not draw down from the corpus. There is work available for seniors if they want it. Some of them can continue to work in their line of specialisation. We have seen others seek work in housing societies and offices as managers to perform administrative functions.

d) Monetising one’s home – Many people are asset-rich and may have more than one home. Instead of selling the house and easing the strain, they live a frugal life as the other properties are earmarked for their children!

Even if someone has one home and is facing a cash crunch, it could be wise to sell the home, buy a cheaper home, and use the balance money to augment their retirement corpus. If they cannot buy another property and be left with some money for their retirement needs, it is better to stay on rent and use the proceeds.

e) Children to the rescue – Children are sometimes seen as those who will support their parents in retirement. Many do not want to be in this position. They would ideally want to be the one helping their child! But, depending on children does come up as the last resort for people who do not have sufficient money in retirement.

ALSO READ: SIP At Rs 250? Why Small SIPs Are A Smart Start For Low-Income Investor

These are some of the ways in which someone who does not have sufficient corpus can manage. What they should not do is as follows –

1. Investing aggressively – Those who have a modest corpus want to invest aggressively to make ends meet. Sometimes, such people end up investing in bogus/ponzi schemes that promise super-normal returns and end up losing even their principal.

2. Take some risk – Sometimes the opposite happens – they do not want to take any risk with their capital. Those with a limited corpus can invest a portion of their wealth in growth assets like equity. This will help in making the corpus last longer. Investing very conservatively would not help.

3. Diversify – To spread the risk, they should invest across the asset classes and schemes. More than anyone else, such people would be hit by concentrated investments.

ALSO READ: Why You Should Review Your Financial Plan: 5 Money Scenarios When You Can’t Ignore It

It is important to save for retirement from the early years. If the corpus comes up short, we need to act sensibly and mitigate the situation, as discussed above. Retirement is not accorded the seriousness it deserves. It is time for us to understand and change that.

The author is the MD & Principal Officer at Ladder7 Wealth Planners and the author of the book “If God Was Your Financial Planner”.