Experts advise creating an investment portfolio aligned with one’s short- and long-term goals, like marriage, retirement, medical emergency, etc., or ensuring adequate funds for all situations. In a recent post on X, Radhika Gupta, CEO of Edelweiss Mutual Fund, emphasised the need for liquidity in investments for seniors, saying, “We talk of more debt and less equity risk for senior citizens. But illiquidity risk is far more problematic. As you get older, get more liquid.” Her message drew significant attention from users, many of whom responded to it.

She highlighted three situations related to property investments:

• When the tenant is not ready to vacate the property.
• When the property market is not conducive to sale.
• When the transaction is in cash.

Although property investments are considered safe, investors often forget that a property may not be readily liquidated. Gupta’s post underlines some of the risks in property investments. While she highlighted property, assets like physical gold may not also be as liquid as expected.

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Retirement Planning Is More Than Saving And Investment

Ensuring cash flow post-retirement is critical in financial planning. Thus, retirement planning is more than just saving and investing. It must ensure sufficient cash flow or liquidity in old age. If a person creates assets and builds a retirement corpus but does not consider liquidity, the investments would not be useful when a senior person will it the most.

Regular Cash Flow And Liquidity Are Crucial

It is often seen that seniors have an asset in their name but do not have money for daily expenses, and then they have to sell the asset to meet their regular expenditures. Cash flow is crucial for all, especially senior citizens, as their income sources are generally limited to pension, rental income, or some side hustles. If the income source stops, they will be left with no money. So, a reliable cash flow and liquidity of investment are essential. Otherwise, there will remain no point in investing if the individual is unable to get the money when needed.

Gupta pointed out two risks, high debt and less equity, that were often discussed and advised to senior citizens. Typically, seniors are advised to pay off their debt well before retirement, ideally in one go. Similarly, equity is considered risky, and seniors generally avoid taking exposure to equity instruments.

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Clearly, these risks must be addressed, but ensuring a regular cash flow can’t be ignored. In a portfolio, one needs to plan for cash flow, growth, inflation, liquidity, stability, and emergency risk coverage.

Hence, retirement planning is not just about saving and investing for the long term but also about planning a secure financial life during the golden years.