INDIA: Call to Handle the Old with Care

Kapil Kaul, Country Head for resource mobilisation, HelpAge India, a voluntary organisation working with and for older people, writes today about issues worrying seniors in this country. NEW DELHI (Financial Express), July 22, 2006: Over the years, seeking advice and support from HelpAge, many elderly people have written in to us expressing their insecurities and fears about fast-dwindling savings, nose-diving interest rates, and declining standard of living. Often, they seek second careers, financial advice, or other alternatives. A typical example. Mr. S. N. Chawla is 83. Twenty-five years ago, when he retired as chairman of a big corporate, he thought he was taking home a lumpsum enough to keep him in comfort for life. He invested wisely and till a few years ago, was able to live off the interest. It paid for the maintenance of his two-storey bungalow in Friends Colony, his club bills, the salaries of his servant, cook, and driver. That was before interest rates went south and Mr Chawla reached the assisted-living stage, when his medical expenses rose and he also had to hire a part-time nurse. So it was either a cut in his expenses on recreation, or dip into his savings. The fact that he lost his wife nearly 20 years ago and has no children or other close family made it difficult. Cutting down on recreation meant being more lonely. So, he started dipping into his nest egg. Now he’s unsure how long his money will last and is considering putting part of his home on rent. But with crime against the elderly on the rise, he is scared. What should he do? Looking around, I find this growing sense of panic about old age security is not restricted to the elderly. In the general absence of government-funded social security, an increasing number of young people share the same worries. For Mr Chawla and others like him, a reverse mortgage could provide an answer to his dilemma. However, certain important factors need to be kept in mind before making a choice. It might be advisable to discuss the loan with a counselor or a qualified person within your circle. What are the options? Does opting for reverse mortgage appear the best choice? When is the best time to take out one? In the future, you may be eligible for larger cash advances, because you will be older and your home is likely to be worth more. On the other hand, if interest rates rise, you may not be able get greater loan advances in the future. Then again, how much of your available loan amount would you take as a lumpsum, as a credit line, or as a monthly advance? For what reasons would you take withdrawals? These are important questions to think about. Another consideration needs to be the impact of a reverse mortgage on your heirs. Once the concept of reverse mortgages becomes reality, there will be need to exercise judgement with care. © 2005 Indian Express Newspapers (Bombay) Ltd.