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LET’S CREATE A RETIREMENT VISION

The conventional way to plan for retirement is to create a corpus by regularly investing till the envisioned age of retirement, after which the corpus thus accumulated would be self-sufficient to generate a regular flow of income to sustain the same standard of living during the post retrial phase of life for self and financial dependent/s(mostly spouse) till the expected life span(i.e., AGE-80 mostly).

The entire exercise of choosing the best suited pathway or investment vehicle plays a crucial role in arriving at the adequate retirement corpus needed at vesting/retirement age.

INVESTMENT (FINANCIAL ASSETS):

The most important aspect of investments is “Financial discipline” as most often than not, we may falter and do not adhere to the objective of investment in the long run, it is easier said than done, as many a time we may discontinue, withdraw or utilize the funds earmarked for a specific goal (retirement) for other reasons due to many reasons be it medical emergencies, or changing aspirations or opportunistic investments etc.

REAL ESTATE:

In the Indian context, when compared to the developed economies like U.S.A, U.K etc., where the way to plan for retirement is generally by way investing primarily into investment assets/vehicles like stocks, Mf’s, Deferred Annuity Plans offered by insurers, tax exempted retirement plans (401k) etc. much in contrast to the conventional way of planning for retirement in India where, the real estate investments and rental income arising thereof is considered as an alternative post retiral income source. But the best suited way to plan for retirement is to diversify and opt for a diversified asset allocation into a combination of both the real and financial assets.

PENSION:

The minor proportion in the Indian context comprise of the government employees (who have joined service before JAN, 2004), these employees are entitled to pension based on the erstwhile defined benefit schemes. But a commonly held misconception that though the government regularly enhances the pension by Hikes in Dearness allowance, changes during the Pay commission etc. it would be prudent even for the government employees to plan for the retirement and cross check to verify the pension available to them would be sufficient enough to sustain the same standard of living.it is highly recommended to avail professional help on this front.

Let us look at a few other factors that we should consider for retirement:

STANDARD OF LIVING:

It is very important to determine whether one would like to settle down in a city or a village/town in the countryside as it would directly reflect in the standard of living costs.

COST OF MEDICINES:

As health care costs are escalating at a staggering 12%-15% pa worldwide which means that the adverse health condition which is more prevalent now than earlier times would lead to an additional financial burden for self and family. So factoring this cost is a crucial component for retirement planning.

EARLY RETIREMENT:

Though everybody aspires to retire early, with changing times are also the aspirations of people, not to mention the instability of career, higher attrition rate of employees, short work span, all leading to a situation to set aside a huge chunk of present income and investing the same for providing post-retirement income needs.

FINANCIAL DEPENDENTS:

Retiring early also means additional financial dependents as the children might not be totally self sufficient and independent financially, which means the parents/bread earners of the family have to support them too till they become independent, and in modern times, even the average age of marriage has gone up drastically which means late marriages are the norm of the days.

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