Ever since a person enters teenage he is told stories about successful people with name, fame and most importantly, money! People achieve a lot but in that process, go beyond their own expectations and lifestyles too and get on with their life, planning for family in the same manner. The once-called-luxuries become necessities and financial wizards have shown the benefits of leverage too which of course, may be understood and misunderstood in one's own wisdom.
But, we forget during this luxurious and leveraged life span that the journey which had started from being dependent -> independent -> inter-dependent ->?.. Could end at again being 'dependent'! This is realized when your HR informs you that you are retiring next month and then you start calculating your expected retirement corpus. "Wish I had 5 more years of working!" "Wish I had the right spectacles to see through a few years back!"
Life in retirement is as long as career itself and some times even more. Retirement means no salary on the last day of every month, no increments, no medical reimbursements and no bonus! It also means inflation could be hurting more than ever with increased lifestyle and health care costs but limited/no income at all. All your investments could be subject to 'market risks' and irrespective you could have to liquidate some portion to meet current expenses.
If not planned well, you could have to live a life of compromises.Travel and recreation could seem to exist for the affluent. After living a lavish life, would you be able to compromise on the standard of living? And a few more developments which make retirement planning more critical in the Indian context are absence of any kind of social security for majority of people, rapidly decreasing career span due to long study time or want to retire early, increased longevity and reducing joint family system.
Let's see the other side of the coin; what if the planning was done properly? Instead of you working for money, you make your savings/investments work for you; annuity, pension, interest, dividends, capital gains, less taxes; enjoy senior citizens' concessions by increased deduction in computing taxable income, lower train fare/air fare; no milestones, targets except the one given to you daily by your new boss (Spouse!). You would rather Google a new place to explore than ways of earning more money to do so!
For a carefree retirement at least as good as the working span, you must start planning now as it is never too early to plan for retirement!
3-Step process for Retirement Planning:
Assess the cost of post retirement life based on current lifestyle net of inflation. Add increased healthcare costs, vacations, other family celebrations and reduce costs like children's education and rent, if you own your home.
Estimate the amount you would need to save regularly from now to build the retirement corpus which if accumulated at that time should be sufficient to substitute your pre-retirement income or a little more than anticipated post-retirement expenses.
You must start early and systematically to experience the power of compounding and top up such an investment whenever possible. While investing for retirement, parameters like diversification, portfolio balancing, risk, taxation, estate planning should also be managed.Most importantly there should be ample liquidity to tide over any contingency. The investments must be capable of protecting one from inflationary pressure at the same time should be wealth protectors.
But, we forget during this luxurious and leveraged life span that the journey which had started from being dependent -> independent -> inter-dependent ->?.. Could end at again being 'dependent'! This is realized when your HR informs you that you are retiring next month and then you start calculating your expected retirement corpus. "Wish I had 5 more years of working!" "Wish I had the right spectacles to see through a few years back!"
Life in retirement is as long as career itself and some times even more. Retirement means no salary on the last day of every month, no increments, no medical reimbursements and no bonus! It also means inflation could be hurting more than ever with increased lifestyle and health care costs but limited/no income at all. All your investments could be subject to 'market risks' and irrespective you could have to liquidate some portion to meet current expenses.
If not planned well, you could have to live a life of compromises.Travel and recreation could seem to exist for the affluent. After living a lavish life, would you be able to compromise on the standard of living? And a few more developments which make retirement planning more critical in the Indian context are absence of any kind of social security for majority of people, rapidly decreasing career span due to long study time or want to retire early, increased longevity and reducing joint family system.
Let's see the other side of the coin; what if the planning was done properly? Instead of you working for money, you make your savings/investments work for you; annuity, pension, interest, dividends, capital gains, less taxes; enjoy senior citizens' concessions by increased deduction in computing taxable income, lower train fare/air fare; no milestones, targets except the one given to you daily by your new boss (Spouse!). You would rather Google a new place to explore than ways of earning more money to do so!
For a carefree retirement at least as good as the working span, you must start planning now as it is never too early to plan for retirement!
3-Step process for Retirement Planning:
Assess the cost of post retirement life based on current lifestyle net of inflation. Add increased healthcare costs, vacations, other family celebrations and reduce costs like children's education and rent, if you own your home.
Estimate the amount you would need to save regularly from now to build the retirement corpus which if accumulated at that time should be sufficient to substitute your pre-retirement income or a little more than anticipated post-retirement expenses.
You must start early and systematically to experience the power of compounding and top up such an investment whenever possible. While investing for retirement, parameters like diversification, portfolio balancing, risk, taxation, estate planning should also be managed.Most importantly there should be ample liquidity to tide over any contingency. The investments must be capable of protecting one from inflationary pressure at the same time should be wealth protectors.
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