Simplify finances after retirement: 8-point checklist
Simplify, simplify, simplify Wrap up what you can Last week, I met an 85-year-old gentleman, whose favourite pastime is to speculate in the stock markets
Simplify, simplify, simplify Wrap up what you can Last week, I met an 85-year-old gentleman, whose favourite pastime is to speculate in the stock markets. He was absolutely gleeful when he described his successes. He told me how he eagerly looks forward to the markets opening in the morning, and how his little tricks and techniques have made him money.After a while, we moved on to losses and what he does about trades that fail. He told me that he doesn’t care much for the losses and had learnt over time to take the loss and cut it early. We both laughed heartily at the textbook rule that stock holdings should reduce as one ages. Generalisations must have exceptions too, and rules can’t be blindly applied, he argued.This gentleman is a retired bureaucrat drawing a decent pension, and living in a house that he owns. His income is adequate to cover his routine expenses and leave a surplus for his speculative pastime. His children live abroad and he stopped visiting them after his wife passed away five years ago. He is quite frail, but manages to take a walk twice a day and practise yoga every morning. His eating habits are simple and he loves the modern India that delivers everything he needs at his doorstep.He then asked me if I had a set of rules for someone like him. What should one be doing about personal wealth at this age? My answer was: simplify. Your wealth must last you a lifetime and work for you as if you would live to a hundred years, but your operational arrangements should be such that it is easy to take over should you pass away the next day.
How does one operationalise this, he asked. Here is a checklist.First, list all your assets and make a table that shows where each one is, what their current market values are, and what the records state about each asset. This must include land, property, bank accounts, demat accounts, mutual fund holdings, bonds and deposits, gold, precious metals and jewellery. Make sure this list is easily available to your children when they inherit it after your time.Second, complete the paperwork that enables accessing and transmitting the assets after your time. Ensure that the land and property are electronically registered—which is now required in many states—and that ownership is clear in the title documents. Ensure that all investment accounts have the correct address, e-mail and phone numbers, operational process that is easy, and nominations that are in place.Third, evaluate your assets to ask if you need all of these, or would like to sell and simplify. Your children will benefit from readily available bank deposits and financial assets, rather than having to deal with the hassle of selling property and jewellery. Sell what you do not need while you are alive and alert.Consider whether you would like to continue living in the house you own, or would like to sell and move into a retirement community or a smaller property, preferably registered in your children’s name.Fourth, you may not need a long list of investments. Close bank and investment accounts that no longer serve you any purpose. Reduce your stock and mutual fund holdings, and consolidate these.
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