Retirement planning: Factors to look out for

By PV Subramanyam
www.subramoney.com

When I say retired people I mean people who do not have any earned income. That means they are dependent on:

• Pension
• Interest and dividends
• Children

Well these people have some really tough decisions to make:

1. Where to stay?: I have stayed all my life in Mumbai, now I have a house in Pune, but I cannot stand the cold! For many people tolerance to the weather becomes an issue around the age of 70years.

2. Do I sell the main house: I have a house in old Mumbai – and it will fetch a nice big amount. However if I do not like the new location…I will not be able to buy back in Mumbai! This is a huge dilemma.

3. If I sell my house for Rs. 100 lakhs in Mumbai and buy a house in Pune for Rs. 50 lakhs – how do I make sure that my son and daughter do not ask for the 50L?

4. How to manage my portfolio – I have no clue how long me and my wife will live. I have Rs. 45 lakhs, one house in Mumbai with a current value of about Rs. 100 lakhs. I am 64…and no clue whether this amount is enough?

5. How much can I withdraw from Rs. 45 lakhs without worrying about exhausting the money during our lifetime?

6. The house I live is worth a lot, however it is in a building that is 30 years old…I am not eligible for a Reverse Mortgage because they fund only buildings that are less than 17 years old. What should I do?

7. I have lived in a comfortable budget all my life, how much should I worry about inflation?

8. Should I sell this house and buy 2 houses in Pune – staying in one and giving the other on rent to my son? He will not have to pay rent once we are not around…is there a risk in such a deal? what is the risk?

9. My son wants me to guarantee a loan that he and his wife are taking for doing a new business. My daughter and son in law are asking me not to sign, my wife is asking me to sign. I have no clue what to do!

10. I have medical insurance but I feel it is not adequate…what should I do?