Skip to main content

New Retirement Age is 50

 

I recently met a woman entrepreneur who said, "I don't need a retirement plan," because she was going to continue working her whole life and she had enough real estate assets to fall back on. As is well-known, in India most individuals still invest in real estate believing that it gives good returns and is a security in bad times. However, what one doesn't realize is that with real estate prices stagnating, rental yields being low and the rentals not growing beyond a point; real estate is really not a good investment. One also misses the point that one may not be able to sell easily, at a desired price, when money is needed. 

The only thing certain in business is uncertainty. So if, for whatever reason, she is not able to generate a monthly income, the rental income alone may not be sufficient to meet the expenses and live through old age. 

These days I see more and more people not thinking about retirement planning because of a false sense of financial security. 

Retirement is just not what it used to be in the 1980s or 1990s, when people could easily retire at the age of 60 with a good pension due to high interest rates and good health, which would allow them to lead their lives the way they wanted to. Also, it was assumed that adult children would take care of parents. 

Things have changed a lot since then. People are no longer in secure jobs, which keep them employed till the age of 60. More and more organizations are letting go of older employees and replacing them with younger people at a lower cost. Most of these older people find it difficult to find equivalent roles, and they don't have an alternate career plan. Despite this environment, very few individuals actually have a financial plan in place for retirement. The problem is further compounded by growing aspirations and lifestyles. With couples having children late, they are getting into old age with huge financial responsibilities. Long-term savings that were kept for retirement, say, Employees' Provident Fund (EPF), are being used to fund large expenses such as children's education. With increasing life expectancy, and job insecurity, the failure to plan for retirement is a recipe for disaster. Not to mention the stress individuals will face if they have to live in a way they are not accustomed to or have to depend on someone. 

In the earlier days, saving in a provident fund was thought to be enough for the golden years. But these days, I meet people who actually lament the fact that they get lesser cash in hand because of these mandatory deductions. Many even use their EPF money to fund a house. 

Most people are thinking of today and prioritizing immediate needs over long-term savings. This has also to do with the fact that generation X and the millennials grew up in a simpler environment with little access to lifestyle goods; and now with easy availability of these items, the future planning is put aside. A survey recently found that 27% people contributed less to their long-term savings because of their current expenses on children's education. Also, most people tend to think that because they are earning well, their income will take them through retirement. 

That is not the case. Just earning a good income does not assure a comfortable retirement. 

Running a financial plan and knowing how much to save and invest early and regularly for retirement is the first step of retirement planning. Here are some of the other things that one can keep in mind: 

1. One needs to plan while keeping in mind a retirement age of 50 years because too many people these days say they are burnt out because of working 13-14 hours a day and feel that their careers are taxing them mentally, emotionally and physically. Many don't have a plan B if they get retrenched, and find it very difficult to find jobs commensurate with their current position. In such cases, people live in the false hope of finding new employment and do not cut back on expenses. 

2. Investing and holding on to long-term savings plans such as EPF, Public Provident Fund (PPF), National Pension System (NPS) and others should be sacrosanct. While some level of liquidity is available in these plans, one should assume that these savings are not available for anything else but retirement. 

3. Choosing investments with good risk-adjusted returns is, of course, important. In India, the tendency is to choose an endowment policy or a unit-linked investment plan (Ulip), which have historically given sub-optimal returns and don't even beat inflation. Pension schemes from insurance companies are no better. I find it strange that people are willing to risk their retirement, by not planning for it, but are unwilling to take risk on investments. A good mix of equity mutual funds is a must while investing for a retirement corpus.

4. Aim to finish-off loans by 40 years of age. The amount spent on loan instalments can be invested into equity mutual funds, which can grow well for the next 10 years thanks to the power of compounding. 

5. Automate investments. Too many people tell me that they have no money to invest. This is because when money is available in the account, it gets spent easily. Automating investments helps staying on a financial track as it ensures that you don't miss that monthly investment schedule.  





Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300




 

Popular posts from this blog

Axis Mutual Fund NFO - Axis Fixed Term Plan Series 18

Axis MF has announced that the NFO period of Axis Fixed Term Plan Series 18 (15 Months) under Axis Fixed Term Plan Series 17 19 has been preponded from February 27 to February 24.        --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) HDFC TaxSaver ICICI Prudential Tax Plan DSP BlackRock Tax Saver Fund Birla Sun Life Tax Relief '96 Reliance Tax Saver (ELSS) Fund IDFC Tax Advantage (ELSS) Fund SBI Magnum Tax Gain Schem...

Budget 2014 Highlights for Saving

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The new finance minister Arun Jaitley has just presented his first budget. What measures does the budget contain that will specifically impact savers and investors? Here they are: 1. Housing loans exemption for self-occupied properties increased to Rs2 lakh: Earlier this amount was Rs1.5 lakhs. This move barely keeps pace with the inflation in asset values.   2. Investment limit under 80 (C) increased to Rs1.5 lakh: This is a good move again and offers some relief to taxpayers.   3. IT exemption increased to Rs2.5 lakh, Rs3 lakh for senior citizens. This comes as a minor relief for taxpayers.   4. Annual PPF ceiling to be enhanced to Rs1.5 lakh, from Rs1 lakh: This is in tune with the change in 80C.   5. Long term capital gains tax for debt funds has been rai...

Franklin India Taxshield

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   This fund maintains a quality portfolio of large-cap orientation. The fund manager adheres to a bottom-up investment approach and looks for companies whose current market price does not reflect future growth prospects. Investments are in companies that can drive future earnings growth. Stocks are selected based on the company's financial strength, management's expertise, growth potential within the industry, and the industry's growth potential.   The portfolio is well-diversified across sectors and market capitalisation and follows a blend of value and growth style of investing. The fund follows a predominantly large-cap allocation of over 70 per cent, with small-cap allocation never exceeding 10 per cent since inception.   Performance The fund doesn't dev...

ELSS Funds for different Risk Profile

Match your Goals Risk Profile With ELSS Investment   DIFFERENT TRACKS Unlike funds with a clearly defined investment universe -- large-cap, mid-cap or multi-cap - Tax Saving Schemes do not specify investment focus If you are looking for an equity Linked Savings Scheme (ELSS) to pare your tax burden, the plethora of options may confuse you. Many investors simply opt for ELSS funds , also called tax saving schemes with the best return over a certain time period. However, this may not yield the best results. There are several types of ELSS funds and it requires a nuanced approach to pick the right one. DIFFERENT RISK PROFILES Unlike funds with a clearly defined investment universe -- large-cap, midcap or even multi-cap schemes in the ELSS category do not specify their investment focus. While these schemes have the flexibility to invest anywhere, most tend to follow a defined template. For instance, some funds take a distinct large-cap tilt with a limited exposure to mid or small-cap st...

Reliance Tax Saver Fund Online

Invest in Reliance Tax Saver Fund Online   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saving Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan Invest in Best Performing 2016 Tax Saver Mutual Funds Online Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a mis...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now