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?

more questions later 🙂

 

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  1. With retired father and father in law, I see so many of these fears everyday in my life and infact sometimes I get these fear for them. But atleast so far, kids want to help them in case they need it rather then asking for their help. Hopefully, all the kids collectively never get greedy.

  2. kids helping? what happens to their own needs, a stagnating economy (20 years from now we will be like today’s US or worse EU or Japan), no social security…hey dude provide for yourself…and quickly. Not just monetarily, but also health wise.

  3. Excellent real life situations.Kindly guide both Parents and children who represent regular reader of our Blog.Many thx

  4. What do you think about these situation in villages? Always everyone’s investment is on their kids. There are cases where that investment didn’t pay off, but in most cases, it did. Not sure how it will be 20 years down the line.
    My goal is to make my family financial independent that includes my kid.

    Do you think one who has more than retirement corpus is financially independent??

  5. with a welfare state being the flavour du jour,you can bet that inter generational feuds will increase.parents may be afraid of their children’s incessant demands while children will find their parents to be burdensome.
    the welfare state in the US has achieved what slavery and discrimination could not for 200 years.it has broken the black family.today 72% of black children are born out of wedlock to single mothers. the tremendous problems they will face in future is largely thanks to govt’s good intentions.
    we seem to head down that direction too. NREGA is just the first step

  6. @pravin
    you are right. insurance/drug/medical lobby has made demand/supply in medical costs absolutely skewed and exorbitantly costly. They *have* to be on insurance, else they are toast. we are heading the same way.

  7. Pravin Civics Class 101: The family is the first social unit. US and Europe were busy breaking this for the past 50 years…now if they wonder why their economies are floundering, they must be jokers. No family, no society, no country. Simple.

    Varghese: Books can only give pointers, not be a Q n A. You need to read books and ARRIVE at your OWN solution. If you ask an author of “Retire Rich: Invest Rs. 40 a day” ; you should expect this answer na?

  8. The solution is simple if one thinks beyond Mumbai and Pune.

    – Sell the Mumbai apartment.

    – Buy a large apartment in a tier-3 town (30 Lakhs). The town should be ideally 4-5 hours away from a big city.

    – Buy a big, good and comfortable car/van (10-12 Lakhs). This would also be useful for monthly “health” trips to the city. ( You can get day drivers for cheap in most Indian towns ).

    – Invest the rest 60 Lakhs for a steady income.

    – Invest and learn to use technology (Skype, Facebook, video calls on mobile etc) and your children will be closer than you think.

    ******************************
    Added benefit- Your grandchildren will have some “native” place to go to during summer holidays.

  9. So if my Apartment is more than 16/17 years old then I am not eligible for REVERSE MORTGAGE? Any detailed precise information on this subject?

  10. please use websites and books as pointers. For precise info approach the guy with whom you are planning to do the transaction. This is NOT a transaction website..

  11. Jeet are you intelligent or an idiot? Or are you an intelligent idiot loan taker to buy a house? Buying a house with borrowed money, chuckle, chuckle and saying ‘this is my house’ and paying an EMI which doubles the cost of the house..L O L what to say!??

  12. @Visvanathan … It would perhaps depend on which country you are taking the loan in. However, I am not a great supporter of living with uncontrollable credit. Buying/ renting both have their own advantages and disadvantages. Good luck if you are a forever tenant type.
    Btw, not sure, if you consider yourself intelligent or an idiot. At least your sense of humor… ok l8r…

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