look news india
After spending 30 to 35 years in the job, the day of retirement brings a big turning point in the life of every working person. The bouquet received on the farewell day, the applause of colleagues and the PF and gratuity lump sum fund coming into the account seem very pleasant in the beginning. But as soon as the salary message stops coming on the first of the next month, lines of worry start appearing on the forehead of most of the elderly. Amidst the rising inflation, medicine expenses, responsibilities of children and falling interest rates, how to protect the hard earned money of life and keep getting a fixed income every month, has become the biggest question of today’s times.
Retired government officer Ram Swarth Singh has shown the way to solve this financial dilemma and live with self-respect like a king even after retirement. After completing his service he not only kept his savings safe but also developed an accurate and practical 3-step formula. Today their pockets are regularly filled every month and they are living a prosperous, happy and self-reliant life without any financial stress. His formula is no less than a roadmap for every person in the country who has retired or is going to retire in the next few years.
The first and basic rule of Ram Swarth Singh’s formula is to build a strong wall of protection to avoid any unexpected financial shocks in life. As soon as most people retire, they invest all their money in one place like real estate or long-term schemes, which leads to shortage of cash when needed.
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At least 12 to 18 months of emergency fund: Always keep an amount equal to 12 to 18 months of household expenses in your retirement fund liquid. You can keep it in a high-interest savings account or a short-term liquid fund, which can be withdrawn within 24 hours in case of an emergency.
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Adequate Health Insurance (with Super Top-up): The biggest unexpected expenses after retirement are illnesses and hospitals. Ram Swarth Singh says to avoid touching the basic corpus, keep a good senior citizen health insurance of at least ₹10 to ₹15 lakh along with an affordable super top-up cover, so that hospital bills do not eat away your life savings.
Peace of mind after retirement can be achieved only when a fixed amount like salary is credited to the account without any interruption on the first date. According to Ram Swarth Singh, for this, an excellent portfolio should be made of government guaranteed schemes and safe fixed income options.
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Senior Citizen Savings Scheme (SCSS): This government-run scheme currently offers a safe and guaranteed interest of 8.2%. A maximum investment of up to ₹ 30 lakh can be made in this, which earns huge interest in the account every quarter.
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Post Office Monthly Income Scheme (POMIS): In this post office scheme, a fixed interest income can be obtained every month by investing money through single or joint account, which is not affected by market fluctuations.
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Laddering Technique of Bank FD: Instead of fixing the entire money in a single bank or for a single time, divide it into fixed deposits of different tenures (1 year, 2 years, 3 years). This is called ‘FD Laddering’. With this, your FD matures every year, liquidity is maintained and you continue to get the benefit of higher interest rates.
The biggest weakness of keeping money only in fixed deposits or government savings schemes is that they are not able to beat inflation completely. Household expenditure today, which is ₹40,000, will cross ₹80,000 in the next 10 years at 7% inflation. If your capital does not grow faster than the rate of inflation, your purchasing power will gradually disappear.
Ram Swarth Singh suggests that 20% to 25% of your total savings should always be invested in hybrid or large-cap oriented mutual funds through Systematic Investment Plan (SIP) or Systematic Withdrawal Plan (SWP).
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Conservative Hybrid Funds: This fund invests 75% of the money in government bonds and debt securities and 25% in blue chip shares. This keeps the capital safe and provides long-term returns of 9% to 11%.
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The magic of Systematic Withdrawal Plan (SWP): From the capital deposited in mutual funds, you can withdraw a fixed amount every month in your bank account like pension. This method proves to be much more economical and beneficial from tax point of view than bank interest.
For the elderly living in Lucknow, Kanpur, Prayagraj, Delhi, Patna or any other city, the capital of Uttar Pradesh, Ram Swarth Singh gives a very important practical advice: “Do give love and values to your children, but never transfer the ownership of your retirement fund to anyone.”
It is often seen that out of emotion, elders distribute all their capital among their children’s business, house construction or relatives and later become dependent on every penny. Financial independence is the greatest honor of old age. As long as you are financially capable, you will hold your head high with pride in both society and family. Keep control of your money in your hands, always keep the nominee updated and prepare a clear will so that there is no legal dispute in the family after you.