Do equity investments have a place in your post-retirement portfolio? The volatility in equity investments in the short term can make one very anxious about the safety of capital. When you retire, regular income through salary stops coming in. In this phase of life, is it prudent to own volatile assets like equity, or should you stay away completely?

At the same time, as advances in medical science have led to longer life expectancy, living 20-25 years post-retirement only on fixed return investments is also not very suitable. 

Nevertheless, the case of every retiree is different. Whether or not you own equity investments post-retirement, will depend on at least these three things.

1. Your assets and liabilities 

If you are moving into retirement with pending loans that still need to be repaid, you must provide for those first and only then think about investing in equity. Ideally, any lump sum you get towards your retirement can be utilised partially for loan repayment and partially for investing. 
Secondly, you have to assess your existing investments. If you own your house, loan free and have investments to cater to your regular expenses, you can have a relatively higher allocation in equity. Post-retirement too you will have at least 15-20 years of active spending and some exposure to equity assets can help grow wealth during those years in order to continue living a lifestyle of your choice. 
2. Your dependents 
If post-retirement too you have to manage the financial requirements of your children or you have elderly parents with medical needs who are dependent on you, go slow on equity investments. Try to have a blend of fixed income assets for stable returns and some equity will be needed, but perhaps a lower allocation to begin with.
Only fixed income investments will not earn you enough for large expenses if they should come up over time or as mentioned above to keep up your lifestyle expenses. However, if you envision higher fixed expenses just as you retire or for a few years post-retirement, ensure you cater to those through safe and stable return investments. 

Post-retirement too you will have at least 15-20 years of active spending and some exposure to equity assets can help grow wealth during those years in order to continue living a lifestyle of your choice. 

3. Your pension or the lack of it 
If you don’t have a regular pension income coming in every month, then work out an annuity scheme which can help you generate regular monthly income. This can be done with a systematic redemption strategy around existing investments or through investments in private pension funds. Once an adequate regular income has been arrived at, then you can think of investing surpluses in equity.
Remember, equity assets take at least 5-7 years to grow and be able to deliver inflation plus returns. Hence, for those who don’t have regular income in the form of pension, go slow on equity investments to begin with and build it up as savings accumulate over a period of time. If you do have a regular pension, you may be in a better position to begin a relatively larger allocation to equity. 
Essentially, you have to assess your financial position post-retirement, the higher the value of assets you own and lower your liabilities – whether through loans or dependents – the more you will be able to allocate to equity. Some allocation is needed in order to continue having adequate wealth creation through the 2-3 decades of retirement and also if you wish to leave a legacy for the next generation.