Retirement readiness

Retirement Readiness

Living safely, securely, and independently well into retirement

Retirement is when we go from a pay cheque to a ‘self-cheque’. In other words, retirement is that stage of life when an investment corpus (and not the individual) generates the income needed for carrying on in life. Ideally, we would want to retire from gainful employment only when an alternate source of income has been provided for. But is retirement readiness only about providing for these financial needs? Isn’t it much more than just managing the finances?

There is a lot more to retirement than just being financially ready. It is also about dealing with the hassles of day-to-day living in increasingly complex ecosystems. Retirement looks very different for us today than it did fifty years ago. Improvement in life expectancy means that there might be an additional 20-25 years of life post-retirement. Living longer means requiring a larger corpus and realizing that the outflow will be larger every year as compared to the previous year. This could, in turn, lead to a lesser amount of money being left behind for our near and dear ones than we intended.

A longer life also means physical aging and a potential drop in health amidst rising cost of healthcare. Moreover, we might not be living with our children, as our elders did. Most of us live in nuclear set-ups, with our families living across the country or even across the globe. Hence, lack of safety and security, coupled with isolation and neglect are the other realities of modern retirement.

However, retirement need not be all about loneliness and drudgery. Imagine holidaying more frequently than once a year, putting on a golf course, starting a new business, spending quality time on a hobby that we’ve always wanted to pursue, or for that matter, monetizing time through utilization of our professional skills. Now, what could be better than that?! For a country of savers where retirement has long represented an acceptance of a reduced standard of living, we have come a long way. We are no longer prepared to cut back on the comforts and luxuries of a certain lifestyle and would look to maintain the same, if not better it.

Unfortunately, people retire, but inflation does not! For the same standard of living, household expenses typically double every ten years. If the retirement corpus today is Rs. 1 Crore, it would be equivalent to Rs. 50 lakh and Rs.25 lakh in 10 years and 20 years down the line respectively. Inflation has a dual impact on savings – it not only erodes the current purchasing power but also magnifies monetary requirements for the future. Therefore, financial sustainability amidst high inflation is a key post-retirement concern. Actually, if you look closely, all these essentially feed into one another. We’re getting older, we’re living longer, and we’re changing what it means to age. Thus, a holistic plan should address all the three key parameters of a happy retirement life – health, wealth & time. Is your retirement plan sustainable and dependable?