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Financial literacy for senior citizens: Crossing retirement hurdles

Does the feeling of retirement scare you over making you happy? If yes, here are some tips for you to overcome the fear.

Retirement is a phase that most people look forward to in their lives. It gives them the freedom from work and the time to spend on their creative interests. However, it may not be as pleasant as they expect it to be if they do not think about retirement challenges and solutions.  

Some people dread the thought of retirement because it makes them financially dependent on others. Nevertheless, the journey can be smooth if they acknowledge the importance of planning for financial security in old age. Today’s article discusses the different aspects of financial education for the elderly.

Also read: Importance of financial literacy

The importance of financial literacy among seniors

Understanding some of the challenges of the retired is essential in recognising the need for elderly financial literacy.

  • Post-retirement, most senior citizens do not have a salary or business income. Unless they receive a pension or have sufficient returns from different saving schemes, stable monthly income is uncertain.
  • With inflation and rising prices, the thought of no recurring income can impact one’s mental health to a large extent.
  • Insufficient savings during retirement leads them to depend on their children and others, which can cause embarrassment and disputes between family members.
  • With old age comes declining health. Hence, having sufficient funds to meet health-related emergency expenses is crucial.

Senior citizens’ money management tips

There are various financial institutions and planners who specialise in providing retirement savings advice for seniors. But here are some basic tips we can all follow for planning for financial security in old age. 

  • Investment options

Investing in the right avenues can significantly help after retirement. Since most of them do not get the opportunity to continue in their regular jobs, returns on such investments become the primary income source.

Hence, assessing the pros, cons and features of such investments is essential before investing. As people age, the ideal options are those which are exposed to lower degrees of risk and provide stability. Fixed deposits, post office savings, etc., are commonly preferred by senior citizens since money is usually safe here.

  • Government schemes

The government of India has various schemes for senior citizens. These are usually one of the safest ways of earning some income, as it is backed by the government itself. Some examples of such schemes are the Senior Citizen Savings Scheme (SCSS), Pradhan Mantri Vaya Vandana Yojana (PMVVY), etc.

Also read: Financial mindset

  • Health insurance

Having medical insurance is exceedingly important, especially in old age. People usually rely on office insurance benefits and avoid holding private ones. This naturally expires once they retire, leaving them with no insurance facilities. Inadequate insurance burdens senior citizens during times of medical emergencies.

Hence, holding private insurance is always ideal.

  • Update yourself to adapt to the growing technology in finance

The world of finance is going through a digital revolution. The latest technologies benefit senior citizens with payments and bills, helping them handle these tasks from their homes. Facilities like mobile banking and UPI make finance management simpler.

  • Be aware of frauds

Since a stable income becomes a challenge post-retirement, there is hardly any room to lose money. Hence, knowledge of the different kinds of fraud and scams is essential in protecting money from being misused.

  • Look for easy income options

Today, there are hundreds of options to work and earn from home. Some of those jobs are general in nature, without the need for specific qualifications. One of the best retirement income strategies is to look for such earning avenues to arrange for alternate earning sources.

  • Keep brushing your financial literacy skills

There are new concepts in finance coming up every other day. Learning these skills can benefit seniors and people across different age groups. These skills help in gaining the required knowledge for making informed financial choices.

Thumb rules managing finances in retirement

There are various thumb rules that act as budgeting tips for seniors. The following ones are common.

  • How much should you save every month?

The thumb rule suggests saving 10% to 15% of your income towards your retirement fund from the start of your career until retirement. Individuals can alter the percentage to accommodate their ambitions and commitments.

  • How much should your retirement fund have?

The thumb rule suggests having a retirement fund that is 25 times your current salary at any given point. Following this principle brings in financial discipline and provides robust backing during retirement. 

  • Your investment portfolio

Experts suggest applying the 100 – age rule for determining investment in debts and equities. With age, the risk appetite lowers, because of which the investment in debt should increase. So, a 60 year old person must invest 40% (100-60) in equities and 60% in debts.

Also read: Government bonds in India

  • The withdrawal rule

The thumb rule suggests withdrawing not more than 4% from the retirement fund every year after retirement. This allows them to have sufficient savings even if there is no stable recurring income.


The essentiality of financial literacy is not restricted to any age or gender. Every individual, including kids and senior citizens, requires financial knowledge for a smooth financial journey. Retirement planning for seniors allows them to handle challenges independently and lead a comfortable life.

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