Demystifying money management for elderly people living alone

With the transformation of our societies, family structures in India are shifting away from traditional joint family systems, leading to an increase in loneliness among the elderly population. The number of senior citizens living alone has risen significantly, resulting in a decline in their quality of life.

As per a survey conducted by the National Statistical Office titled Elderly in India 2021, in 1961, 5.6% of the population was in the age bracket of 60 years or more; the proportion increased to 10.1% in 2021, further likely to increase to 13.1% in 2031. The World Health Organization says, "Increase in longevity and decline of joint family and breakdown in social fabric pushes seniors into loneliness and neglect. A heathy life, with physical activity, good diet, and avoiding tobacco, alcohol, and other habit-forming substances, is recommended. Positive attitude and mental wellbeing promotes quality of life in advancing years."

Financial security can be crucial for those living alone without family support, as it can help alleviate some of their challenges. On the other hand, insufficient financial resources can exacerbate the difficulties experienced by the elderly, making it difficult for them to obtain proper care and support from external sources, particularly in emergencies.

Keeping an eye on the impact of inflation

Underestimating the impact of inflation during retirement is a common mistake many people make. Neglecting the implications of inflation on your financial situation over time can have significant consequences. Adjusting your asset allocation while planning for retirement is crucial, considering your risk tolerance, desired corpus, and time left to retire. The desired corpus should be adjusted accordingly to account for the dampening effects of inflation post-retirement.

Leaning on others

To ensure financial security, it is crucial for senior citizens to designate a trusted family member who can manage their finances. Usually, elderly people assign this responsibility to their children to avoid difficulty accessing funds during emergencies. Additionally, in our society, children are considered the primary support system for most seniors. This becomes even more important for seniors who live alone.

When children or family members keep a tab on the finances of the elderly, it helps them stay prepared for any unexpected situation or emergency. It would be imprudent not to envisage a time when elderly parents may be unable to manage finances independently. Figuring out the complexities of someone's finances during an emergency can be daunting, so it's better to be prepared beforehand. By seeking the assistance of adult children, senior citizens can also avoid falling for fraudulent investment schemes.

Many individuals tend to assume that health issues will not arise immediately upon reaching the senior citizen age bracket. They often believe that exorbitant medical expenses can only occur in the last stages of life.

Senior citizens often fail to recognize the cascade effect of minor medical issues. According to experts, the most crucial problem senior citizens should deal with is having sufficient health insurance early on. It is vital to have comprehensive health coverage in place – so that additional paperwork or unnecessary inquiries can be avoided during an exigency.

For seniors who are not tech-savvy, online investment options are best avoided. Analysis paralysis due to excessive choices, information overload, and lack of expertise become more significant problems over time. Investments spread across multiple avenues can become challenging to manage while living alone, and thus the portfolios should be limited to a select few instruments. Seniors who are affluent and are looking to leave something for their children and grandchildren can invest a portion of their assets in equity mutual funds in the long run.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

म्यूचुअल फंड निवेश बाज़ार जोखिम के अधीन हैं, योजना संबंधी सभी दस्तावेज़ों को सावधानी से पढ़ें।