Will you run out of money in your lifetime?

Bhuvanaa Shreeram

Running out of money is a primal fear. The prospect of not having money in old age causes serious anxiety. Not having money would mean cutting down on expenses and living a lifestyle you are not used to.

And to make those adjustments in old life is not easy. Or worse, it would mean being dependent on others, most likely children. The freedom to make decisions on where to live, how to spend time, what to buy, etc. is snatched away. All these are not easy.

It is tough to trade freedom for comfort. And as an extension, respect for ‘possible’ comfort. So, this fear is totally justified. Running out of money is an extremely undesirable situation for those who value independence and self-respect.

However, only those who have accumulated some money or built up some wealth would fear running out of money. If there is no money, there is nothing to run out of. So, assuming you have some reasonable wealth, what could cause you to run out of money? Some of the reasons could be:

When a person retires, that person suddenly comes into possession of a rather large amount of money. The person may not be used to handling such large sums. The person also goes through a transition that is wrought with loss of identity and purpose.

All these result in a tendency to spend freely, travel and give away money. It is important to note that even if you have a lot of money, if you throw it around, it won’t stick with you for too long.

Inflation is like a termite. It eats up wealth from within, slowly, but surely. Unless the wealth is growing at a rate higher than the rate of inflation, it will only be a matter of time before the money runs out. If you do have a lot of money, maybe it will run out after your lifetime. But that is just hope. Not a plan.

This could be very unfortunate. Health issues, family commitments, or wrong decisions resulting in big losses could result in big dent in one’s wealth. If such a thing ever happens, then the likelihood of running out of money in one’s lifetime is very high.

So, how can you ensure that you don’t run out of money?

Having an ‘Enough’ mindset

Having ‘enough’ is an unattainable goal, if you are not sure of ‘enough for what?’. Once you know why you need the money, and what you want the money to do for you, it becomes easier to determine how much is ‘enough’. However, ‘enough’ is not a number, it is a decision. You just have to stop somewhere and say ‘This will do’.

Being alert about investments and expenses

For a vehicle to move forward smoothly, both wheels should run in tandem. While you keep an eye on how your wealth is growing, you should keep your other eye on staying within spending limits. Even indulgences can be planned and executed without guilt. That way, the vehicle can keep running for a long time.

Having sufficient insurance cover

One of the biggest threats to wealth retention is ill health. In old age, getting health insurance becomes more and more difficult. It is important that you purchase sufficient insurance early in life and keep these updated and renewed at all times. Insurance requirements change as well.

Five years ago, health insurance cover of Rs 3-5 lakh was considered decent. These days, Rs 20-25 lakh looks just about sufficient cover. Periodically checking whether you are covered for the most foreseeable contingencies can ensure your money doesn’t end up getting spent in hospitals.

Staying healthy, happy and purposeful

An idle mind and sedentary lifestyle are villains to not just your health, but also your wealth. Without proper direction, money can end up in undesired places. Money is a tool to live a good life. Having a strong purpose in life, gives your money too, a purpose. As an energy it can be directed to serve the right intentions and enable you to create a lasting legacy.

May you never worry about running out of money. May you be a blessing for yourself, your family, your society and your country.