Tired or Retired ?: Bhavesh Khetan
As human beings we are always influenced by societal and cultural trend which impact the socio-economic framework and hence few concepts keep evolving with time. Retirement is one such concept.
Retirement is a word often associated with a certain age but such a myopic view does not hold good in today’s world. In last few decades, there has been a big shift from pension paying jobs (government and PSU jobs) to non-pension paying jobs (private jobs) and from joint family to nuclear family and hence retirement must be seen through a different lens. Add to this, the increase in life expectancy and rising medical cost to drive home the importance of subject and the need for personalized action plan.
In my view, Retirement word should be redefined as a stage of life when one does not work for money. Such a stage can come early in life as well as late in life, it is unique to every individual and hence it may need a personalized approach to plan for this stage of life.
Three important questions to ask on this subject are:
- At what age, one wants to stop working for money or even if he works its voluntarily and not forced upon by circumstances
- How much will be the estimated monthly expense to sustain the lifestyle
- Are we on track to create a corpus which ensures that we can fulfill the above mentioned points
For some jobs which have a defined retirement age, the first point is easy to answer. Having said that, we know many people who although have retired from their jobs but are forced to work in a different setup as the monetary requirements outpace the income. On the other hand, there are numerous examples where people have made enough money so they have full control on how they are spending their rest of the life.
The second point about lifestyle is more subjective in nature. Let me try to explain with an example. Imagine you have retired and it’s a Monday morning, you have just finished your breakfast and now its idle time till lunch. How will you spend the time till lunch.
- Will spend time on screen or read something of interest or do some household chores
- Will go to the club to spend time with friends
- Will go to the charitable trust and provide free service
- Will get involved with my passion for arts / music / literature
Your post retirement lifestyle will have a big impact on how much will be your monthly expense. One needs to carefully think thorough the post retirement lifestyle which consequently will lead us to the answer of the second point about monthly expense.
Now the most important part, how are we placed today, whether we have a plan which can help us secure a lifetime income in that stage of life where working for money should be an option and not a condition.
The corpus we want to build for TOMORROW needs savings from TODAY, this may lead to a battle between the present and the future self. Expenses makes TODAY happy whereas savings make the TOMORROW happy, so it’s a tig of war between present and future, both of them want to be happy but it’s a zero-sum game which means one can’t do both. Spending reduces Savings which is not liked by TOMORROW whereas not spending is not liked by TODAY.
The job is to find the right balance between TODAY and TOMORROW and If we have not planned till now, it’s a wakeup call. We must start now else we will run out of time and TOMORROW will become TODAY.
Views are personal: The author is Bhavesh Khetan, a Mutual Fund Distributor from Nagpur
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