Retirement Planning : For the Young at Heart
Retirement Planning ( Q&A)
Retirement is for the old , it's boring if not depressing to talk after retirement . However it need not be the like this.
Retirement can also be seen as freedom from
the 9 to 6 job . … from the grumpy , self promoting bosses …. From the endless emails …. From the time slavery .
It may mean more time to do things you always wanted to do . Your painting , singing , travelling … and for some programming , App development , new startup , cooking , and what not !
So here we are to discuss retirement from the day to day routine , not from enjoying life !
Long healthy life is a gift . However higher life expectancy also implies a longer retired life. This increases the total amount of savings required to fund post retirement expenses.
Thus there is a risk of outliving your savings beyond what we plan for. One way of managing this risk is to buy Annuities by which the risk is transferred to the underwriting company.
This answer will vary from person to person and family and will need detailed financial planning . If you want us to do your planning you may approach us with your details .
However the basic back of the envelop calculation will involve the following :
What are your present monthly expenses . You may assume your post retirement expenses will be 70 to 90 pct of your present expenses . On an average you can start with an 80 pct assumption.
My expenses are too high now. I do not have enough money for saving for retirement. How do I save for retirement ?
One of the greatest advantage of retirement planning is it forces us to plan our finances .When it comes to budgeting or financial planning there are two extremes . I had one friend who will keep track of every dollar spent . Will meticulously file all bills , take regular printouts of all credit card statements and file them , analyze them , plan his expenses etc.
Then I also have a friend who has no clue where his money goes . He had 15 EMI running for home to his last three vacations , car , AC etc . If some fine dining restaurant starts offering EMI for a dinner he for sure will grab that. He will run out of his salary by the 28th of the month . Somehow manage to into the next salary to pay next months EMI.
Most of us are somewhere in between these two extremes. However these examples shows the need for having a plan . Thus whatever be the income we have to start the process of disciplined saving for the future .
Q&A : I am only 30 years old . When do I need to start planning for retirement ? Is it not too early for me ?
It's never too early to start saving for our retirement . The sooner we start the better it is for us. The major advantages of starting early are as follows :
Our plan for retirement tend to be very number oriented .
The endeavour is to optimize all the variables and arrive at an acceptable solution . The solution can be one or a combination of the following :
The final recommendation will have to be decided on a case to case basis based on the individual requirements. The same has to received at least once a year in absence of any major event . In case of any major event that will have a bearing on the plan the plan has to reviewed at the earliest after the event.
However one important unknown factor is the health related expenses .The need for keeping in good health cannot be overemphasized . When we look at the inflation in health related costs it is much higher than the overall inflation rate .
In India for instance the general Inflation is coming down supported by falling Oil prices health cost inflation continues to be at double digit levels .
So staying healthy by cultivating healthy habits can considerable reduce post retirement expenses . I point to ponder over . Send us your thoughts on this? How much is the medical costs you have budget for ?
All of us wants to retire early and spend quality time in doing things we always wanted to do, We want to retire and go for the long holidays to Iceland. We want to see the icebergs before global warming melts them down . Before the water level rises and drowns our small island .
So we nurture dreams of retirement from active work . But not from active life . We want to live life on our own terms . We seek freedom from the time clock and grumpy bosses.
We are in the process of collection of some of the common questions that people keep asking on retirement . Hope this helps to clarify some of your doughts . We will develop a Q&A for investments for retirement planning .
Do send in your questions by 10th October ‘15 to have them answered . It will be our endeavour to include answers to all of your queries .
Write to us at Shouvik@9rupee.com
Update : ( Some of the questions that we have received are as follows . Send us your questions and we will answer them )