Retirement:Anxious Moments

Some people have misconceptions about the basic facts of retirement and life thereafter. However, these misunderstandings can lead to the difference between a retirement you had wished for and a retirement you settled for. As the date of retirement draws closer in developing countries like India, anxiety is writ large on the faces of prospective retirees. Some unfinished work like children’s Education/Marriage or outstanding liabilities makes the life tough for those who did not plan their goals in advance.

Barring the employees working in Govt departments/PSU’s or a few other fortunate, who get Pension and family pension to live their retired life peacefully, we don’t find such privilege to the private sector workforce. Most of them working in unorganized private sector hardly get anything worth living after their retirement.

The ratio of Govt to Private sector employees is 100 to less than1.3 i.e 0.1% in India. Pension in the private sector is either not available or not enough for sustenance. These less privilleged ones have to fend for themselves or depend on their children.

Another section of people working in the orgnized private sector gets a few benefits like gratuity/PF etc. The lump-sum amount they receive as gratuity/PF doesn’t get enough interest or passive income and erosion of capital starts through regular withdrawals for meeting day to day expenses.

Let’s come to various misconceptions and lack of initiatives for planning a relaxed and happy retirement by the employees in India

Misconceptions: All Employees

1. Most people think that their children will support them in retirement. Apparently, Such expectations are not wrong as the traditional Indian societal structure imbibes this culture for centuries. But the time has gone when the whole family pooled its resources and helped themselves in living their life comfortably. The cost of education/lifestyle/medical/luxuries has skyrocketed these days. Parents are keener to ensure all-round growth of their kids and spend a lot on their education/sports/hobbies besides planning for their own retirement. Children are hardly left with any surplus money to feed their retired parents. However, there are a few fortunate who find a regular stream of support from their children
2. They believe that their near and dear ones will come to help in case of need. This again is a misconception as no one has the time or spare money to help others. Everybody is tight with his own budget
3. Many think to start a business after retirement forgetting that they lack the basic requirements of being a successful businessman. Different attitude and temperament is required for running a successful business. They have neither the experience nor the shockers to absorb losses which are eminent to happen in any business during the initial years of operations. There is every possibility of losing money. received as retiral benefits
4. Having seen the potential of stock markets and finding a few friends talking about shares, there is an urge to fall prey to earn easy money. The Stock market is not everybody’s cup of tea and speculative trading/investment on the recommendations of friends/ Youtube channel/News Channel/Internet will bring miseries only.
5. Although there are very few chances of getting a suitable job after retirement but some retiring people think that there are a lot of opportunities for experienced professionals in the market.

How Employees think about retirement:

1. They don’t anticipate the future financial needs like urgent medical attention
2. Ironically a few think of living in present never bothering for the future as if it is not going to happen
3. They are happy living comfortably on day to day expenses setting the stage for imminent discomforts in future
4. No long term planning when it was required
5. They contemplate renting out a part of their accommodation if need be. A very casual approach
6. They may sell a part of the equity of their house to meet emergent needs which again is an option hardly considered due to various constraints

What Employees should have done:

1. Should have Visualised plan how they would like to live a retired life
2. Reach out for help from friends and professionals to plan for various goals of life
3. They had three opportunities to initiate a retirement plan. First between 25 to 35 years, Secondly 35 to 45 years, Thirdly 46 yrs onwards. It is better to start late than never irrespective of income
4. They should have Insurance plans in place like Term Insurance which has a very low premium, Health Insurance to safeguard against medical urgencies, thirdly Income Protection plan
5. Think differently to explore passions and rebuild the relationship which they could not do while working for 40 years,
6. It’s good to think of settling first in life and then plan family but you need to plan in such a way that your kids complete their education and possibly get married before your retirement
7. All categories of employees must follow the Budget Rule 30:50:20 meticulously and start planning from the first salary.

What the Retiring Employees should do NOW:

1. with an advanced medical system and a healthy lifestyle, the life span has increased by a few years. There is every likelihood of living for more than 20 years after retirement. They should get a family floater medical insurance covering both husband and wife for a minimum of 10 lakh insurance cover which is essential to meet emergency medical conditions
2. They should not spend lavishly and must preserve the money received as retiral benefits. Invest wisely to earn some extra passive income
3. Firstly building their careers and then bringing up their families, most people remain preoccupied hardly finding time to keep in touch with their relatives/friends and other close relations. This is the time to revive those relations and participate in family get-togethers regularly.

Friends, Can you share any experiences on the subject as this particular scenario brings inconveniences for those who fail to plan their life goals well in advance