During retirement years, in pursuit of higher returns, retirees often park their money in small financial institutions, such as cooperative banks, cooperative societies, private money lenders, or other small financial entities.
While aiming for better yields is understandable, higher returns always come with increased risk.
We’ve seen this recently with PMC Bank—when the bank collapsed, those who had invested all their money in such institutions faced financial ruin.
If that happens, your retired life may no longer remain a retired life—you might have to return to work, if you can even find a job. Bank failures are not uncommon. Looking at the history of the Indian banking system, many banks have failed in the past, and several small banks are at risk of going under.
Cooperative banks and small financial institutions are particularly vulnerable to such risks, so do not make this mistake.
Parking all your money in these small institutions or giving it to money lenders for the sake of higher returns puts your entire retired life at risk.
Remember, once you retire, there’s no second chance to rebuild your retirement corpus. Handle this phase with extreme caution and avoid taking risks you cannot afford.