Retirement Planning – Why we ignore this Goal?
An individual completes his studies around 23 – 25 yrs of age and starts earning. They get married around 28-30 yrs, purchase a house, upgrade cars as per the status (35-45 yrs), pay hefty fees for children education (35-55yrs) continue to support family till children settle down. All of the sudden Retirement is knocking the door (58/60 yrs) where the lifestyle, medical and other expenses will remain and increase with Inflation year on year, and income will STOP/CEASE.
What are the options for Retirees:
To look for employment in the second innings::
One of the options is to look for employment and postpone retirement for another 2-5 years maximum. There are chances that one may get the employment of one’s choice or not, compromise on salary etc.
To be dependent on Children::
No one likes to be dependent on their children for their needs. The way the inflation & expenses are rising, it’s getting the other way round. Many times children look forward to parents for support, It's immaterial to look forward to children for financial support
Create a Source of Alternative Income::
Real Estate Rental Income is one of the options that high net worth individuals opt for but real estate has its own challenges as the premises may or may not get occupied on rent, its maintenance cost, rental yields etc. Some people buy stocks / mutual funds and opt for dividend option which is irregular and dividend percentage varies, so can’t rely on this alternative as well.
- Create Retirement Corpus during employment years::
It is recommended, to start investing for this goal at the beginning of employment years. This will be more clear with the example below.
Mr. A is a 30-year-old individual with the monthly expense of 50,000 per month would be required close to Rs. 3 Lakh per month at 6% per annum inflation at the age of 60. He needs to accumulate 6.27 cr by the time he retires to survive for the next 20 yrs taking the average lifespan of 80 years. He needs to Invest Rs. 18,300 per month to achieve the requisite amount at 12% return per annum to achieve the GOAL.
On the other hand, Mr. B 40-year-old individual with the monthly expense of 50,000 per month would be requiring close to Rs. 1.65 Lakh per month at 6% per annum inflation at the age of 60. He needs to accumulate 3.5 cr by the time he retires to survive for the next 20 yrs taking the average lifespan of 80 years. He needs to Invest Rs. 35,200 per month to achieve the requisite amount at 12% return per annum to achieve the GOAL..
Similarly, Mr. C 45-year-old individual with the monthly expense of 50,000 per month would be requiring close to Rs. 1.25 Lakh per month at 6% per annum inflation at the age of 60. He needs to accumulate 2.56 cr by the time he retires to survive for the next 20 yrs taking the average lifespan of 80 years. He needs to Invest Rs. 51,500 per month to achieve the requisite amount at 12% return per annum to achieve the GOAL.
Therefore, it is clearly evident that early you start, the less amount one needs to invest on monthly basis to achieve the goal. In the above-mentioned example, Mr. A needs to invest one-third of the amount that Mr. C needs to invest to achieve his Retirement Goal.
Retirement is the only GOAL for which no LOAN is available. It needs to be self-created & self-funded.
Take the first step Today.
