Retirement Planning is Pertinent – The Economic Times

Retirement Planning is Pertinent – The Economic Times


Shashi-Bhushan-Verma

Retirement Planning goes beyond Money as it is essential to prepare well for a post retirement social life besides building of corpus.

A recent survey found that the current generation of Retirees in India generally regretted of not saving enough in life. Also, those who are now preparing for their retirement expect to save for at least 6 more years than their previous generation. Proper Retirement Planning should include their Financial and Psychological needs.

Retirement Planning is pertinent because Indian demographics depicts trend of Higher Life Expectancy, Increase of Nuclear families and Absence of social security system. Yet, Retirement funds account for only a small part of total savings. Majority of us don’t save enough for comfortable retirement. Unluckily in India the thought of Retirement Planning comes very late in life and hence the need of Retirement Planning is growing very fast nowadays.

Basic reasons to plan for Retirement: –

  • Inflation
  • Skyrocketing Medical Expenses
  • Pay Cheques / Salary Stops
  • No one likes to be dependent
  • 60 years is not old anymore

Here we would like to suggest and avoid 5 common mistakes while Planning for Retirement: –

– Not creating a Retirement Road Map viz.:

  • What kind of lifestyle you plan to have post retirement
  • What kind of medical expenses might arise due to my current health conditions of self and family members
  • What are my family commitments
  • Will I live on Rent or Own a house
  • Will I have Travel Plans
  • Will I want to pursue a hobby that costs money

– Not knowing the Corpus requirement at the time of Retirement:

  • Prepare a budget of monthly expenses post retirement, multiply it by 12 to give yearly requirement & then divide it by 7% to get an estimation of Corpus requirement

– Not starting early enough. Early beginnings will help reach the Goal due to higher compounding

– Not planning for contingencies in Retirement Plan. Most common contingency you need to prepare for post retirement is sudden medical exigencies

– Not making smart investment decisions. Here it is very important to take into account Tax Bracket of individual, Post Tax Returns of a Financial Instrument, Liquidity of the investment vehicle, etc.

Financial Freedom can be achieved if one has set realistic timeline for retirement, added a bit of planning with self belief & enjoy the journey. One must assess his or her Risk Appetite before choosing an investment vehicle and should not chase returns as it might derail the journey towards BIG GOAL of RETIREMENT.

Current monthly expenses can go up by 7 times over next 30 years due to Inflation. So, it is not only important to save but to invest correctly too. Aim to accumulate a healthy retirement corpus by combination of monthly savings and lumpsum investment.

A good retirement plan will help you enjoy your second innings and long vacation also known as retirement. So, choose your investment vehicle wisely to ensure a decent Retirement Corpus.

So don’t think twice! Plant the seed that will flourish your future and enjoy the time doing all the things you never had time for while working.

Views are personal: The author is Shashi Bhushan Verma, Mutual Fund Advisor from Kolkata.

Disclaimer: The views expressed are of the author and are personal. TAML may or may not subscribe to the same. The views expressed in this article / video are in no way trying to predict the markets or to time them. The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Disclaimer: Content Produced by Tata Asset Management



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