We have all heard catchphrases in retirement insurance advertisements promising assistance during lifetime and beyond it as well (read ‘Zindagi ke saath bhi, zindagi ke baad bhi'), that usually center on retirement and the things one intends to leave for their family in the future. But planning one's own retirement is equally important and is much more than just an insurance plan.

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Trivesh D, COO, Tradejini says that retirement is typically thought of as a period for leisure and relaxation, but it also comes with special financial challenges, particularly for women. He says, "Since many women stay at home for all or most of their lives, and even those with their own sources of income never bother to save for themselves separately, it can be difficult for them to maintain a regular stream of income during their retirement, especially if they are widowed. Additionally, due to potential gaps in income due to career breaks or lower salaries, coupled with rising healthcare costs, careful planning is crucial to ensuring a secure and fulfilling retirement period."

According to a recent report by UNFPA, women in India live longer and have an increasing life expectancy. In India, at 60 years, a person is expected to live another 18.3 years, which is higher in the case of women at 19 years, compared to 17.5 years for men. The feminization of ageing reflects the extra life years survived by elderly females. Thus, managing retirement funds effectively becomes even more critical. With positive strides being made, a 2022 survey found that more than 60 per cent of women are saving for retirement as compared to 52 per cent in men.

Trivesh finds this shift particularly encouraging, as women often face a wage gap compared to men during their prime years of earning. "But basis a similar study done in 2023, only 57 per cent of women were working toward retirement planning, a considerable decrease which indicates poor financial education and awareness towards the importance of financial planning for your retirement," he avers.

However, the trend highlights a growing commitment towards financial independence. He informs, "For instance, let's consider a woman retiring at 55 with a Rs 2 crore corpus and a safe 6-7 per cent return on debt. While this might theoretically sustain her for 25 years, it doesn't account for inflation, potential medical expenses, leisure and recreational costs, and emergencies. That is why it is important to have practical strategies and considerations for retired women to not only preserve but also grow their retirement corpus in the Indian financial landscape."

On the flip side, he says, women are better in risk management and hence the ability to take control of their finances is higher. The first step is to acknowledge risk tolerance. Unlike pre-retirement years, where career income provided a safety net, retired individuals have limited recurring income potential. Therefore, it becomes crucial to prioritize capital preservation and stable growth over aggressive growth strategies. 

In this regard, the COO of Tradejini says that diversification is the golden rule, where opting for a diversified portfolio with a healthy mix of low-risk instruments like fixed deposits, the Senior Citizen Savings Scheme (SCSS), monthly income plans (MIPs) from mutual funds and direct equity investment in large cap stocks can offer stability and regular income. 

However, the 3 common challenges one needs to address are —

Inflation: One must invest in assets that can potentially outpace inflation, like equities or gold.

Healthcare expenses: One must plan for potential medical costs by building an emergency fund and considering health insurance options.

Lifetime income: One must explore annuity products that provide a regular income stream throughout retirement.

With improvement in the quality of lifestyle and post pandemic era of spending on leisure and travel extensively, Trivesh says a healthy retirement corpus is even more important to ensure a similar lifestyle can be lived post retirement. 

Basis a 2022 survey, he says a 48 per cent of women had a target corpus of at least Rs 1 crore, but only 15 per cent of women had an average corpus size of Rs 2 crore or more which is alarming. "But retirement is not just about financial security; it is also about embracing new passions and experiences. Budgeting for fulfilling activities like travel, pursuing hobbies, or engaging in volunteer work adds richness and joy to this stage of life. Determining the desired lifestyle and the corresponding financial requirements is the second step," he adds.

Talking about his suggestion to women, he says, "I recommend several strategies to optimize finances. Most important, paying off existing debt before retiring, especially mortgages, frees up income for other necessities and reduces the financial burden. Prioritizing healthy habits can minimize potential healthcare costs down the line. I am dedicated to helping retired women make well-informed financial decisions. I advise women to consider investing in dividend stocks. It can provide a steady stream of income, which can be particularly beneficial for retired women who rely on their retirement corpus for financial support."

According to the COO of Tradejini, some additional strategies that retired women can consider for their post-retirement plans are:

1. Covered calls are a popular option trading strategy that can generate income from a retirement portfolio.

2. Real Estate Investment Trusts (REITs) and Real Estate Fractional Ownership Platforms can provide regular income stream through rental yields and also offer increased liquidity without the hassle of actually owning the real estate property.

3. Annuities can provide a guaranteed income stream for life, which can be particularly beneficial for retired women who rely on their retirement corpus for financial support. 

4. Always maintain an emergency fund that can help alleviate financial stress during retirement. It's essential to have a cushion of savings to fall back on in case of unexpected expenses or market volatility.

(Disclaimer: Consult a financial planner before making any investment decision.)