How to create an emergency fund post retirement
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How to create an emergency fund post retirement

  • Highlights

  • Emergencies warrant instant action, disrupting your budgets

  • Find out how emergency funds help post-retirement

  • Invest in a high-yielding company FD

  • Find out benefits of taking Insurance plans

Emergencies such as tax penalties, automobile maintenance, repairs, home improvement or healthcare expenses can adversely affect your savings and monthly budgets. These situations call for an immediate finance, and you must set aside a budget to fund these expenses, as they come up.

Here’s a lowdown on some of the options for your emergency funds:

1. Insurance plans:

Dealing with unforeseen expenses post retirement can be taxing. Instead of depleting your savings or having to sell an asset, you can consider investing in good insurance schemes that offer financial cover. You can use different insurance schemes to action structural repairs, pay for healthcare costs and fund the education for your children and grandchildren.

2. Invest in a high-yielding company FD:

A fixed deposit is a flexible investment option that provides you numerous financial benefits. You can re-invest your EPF funds in FDs after retirement. This can be helpful in the following ways:

A) Benefit from the high rate of returns
B) Keep your funds safe from market fluctuations
C) Rely on a safe and stable option
D) Treat fixed deposits as an emergency fund

You can consider investing in a low-risk, stable return Fixed Deposit for better liquidity, online application, flexible tenor, online account management and more.

Loan Against Fixed Deposit

3. Create an emergency cash reserve:

If you’re looking for a liquid option, consider creating an emergency cash reserve in the form of a savings account. This will give you the absolute freedom to withdraw as much as you need to.

You can use this emergency cash for financing sudden expenses, such as fixing plumbing issues or repairing your laptop. It could come handy in situations where it isn’t prudent to make a claim against your insurance policy or to meet costs that aren’t covered by insurance.

For example, if a health check-up isn’t covered by your health insurance policy, you can use this cash reserve to pay for the out-of-pocket expense. Also, withdrawing from a cash reserve isn’t as complicated as exiting an investment option. There are no additional costs such as a premature withdrawal penalty. You can conveniently use a debit card to withdraw money from an ATM.

However, if you don’t invest in high-return FDs, you could lose the benefits of high returns for growing your savings. If you’re worried about the lock-in period of your FD, you can opt for a loan against FD. Most NBFCs offer loan against fixed deposits to help in preventing the loss of gains from fixed deposits.

A mix of these options can help you maintain the right amount of emergency funds, which increase your preparedness for unforeseen expenses in the future. Choose the right financial companies for catering to your needs, so that you can avoid trouble in your golden years!

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