Managing Finances in Sunset Years
Retirement years are meant to be stress free. But managing retirement incomes may not be so. One has to keep in mind various challenges that could crop up in such times of crisis like the one we are witnessing. It presents a dual challenge – preventing one’s regular income from falling, and making sure that any health emergency does not erode a significant part of the retirement corpus. There are plenty of investment options available, but since most of them involve a fair amount of equity exposure, most senior citizens prefer to stay away, given the kind of corrections seen recently.
Where are interest rates headed?
The level of interest rate is the biggest factor that determines the return on investment and the amount of regular income that a senior citizen can expect. Barring some exceptions, interest rates have been declining for the last one decade, with the sharpest fall coming in the beginning of the year. "So far in 2020, the RBI made reductions in the policy repo rate twice, reducing it from 5.15 per cent to 4 per cent" says Archit Gupta, Founder and CEO, ClearTax.
"Given the current situation where economic activities have been impacted, consumption is low and revenues are unlikely to pick up in the near future, the RBI will try to keep the interest rate low to support growth. The repo rate may reduce by 0.25 per. While there may not be a significant fall in interest rates, any revival looks at least three to four quarters away.
