Retirement Myths

Retirement is like old age. And it creeps on you – one day at a time! Here, we bust some common myths relating to retirement.

Myth 1               I will never retire.
Yes, you will. Everybody has to. You may want to work till you drop dead, but what if you really cannot get a job after 55? What if your health does not permit you to work? What if your industry ceases to exist the way you know it? Think of the weaving master and the spinning master….mills do not exist.

Also, why will you want to work at that time?

Even if you are convinced you will eventually run a business that will allow you to take a back seat and keep the money rolling in, you have to plan for retirement. If you were a gymnast you would have retired at 19, a tennis star at 28, a cricketer 32, a jockey 35. he list is endless.

Retirement planning is about saving sufficient amounts of money to give yourself the option of stepping back from your working life WHEN YOU WANT TO, NOT WHEN YOU MUST. Retirement is not an age, it is an amount of money.

Myth 2                     I am too young to plan for retirement.

Says who? This is the best time to plan for retirement. The younger you are, the more time you have on your side; this means you can save a greater amount over the years.
Let’s say you start investing Rs 10,000 every month towards your retirement kitty. Let’s also assume your investment earns 8% per annum.
If you have a 30-year time frame, you would have Rs 1, 35, 93,985.
If you had just 20 years, then it would be Rs 54, 91,345.
If you had 10 years, it would be just Rs 17, 38,387.
The nearer the mountain, greater the slope!

Myth 3      I will save for retirement after paying my loans and meeting other goals.

It never works like that. Once your loans are repaid, you will have other goals for which you are saving.
Your home, a holiday, children’s education and marriage, the list can go on and on. Keep retirement as a constant goal that never changes. You may find yourself facing periods in time when you are barely putting any amount in your retirement kitty. That’s all right. Just don’t ignore your retirement kitty outright.

Myth 4                 Money saved for retirement must never be in shares

On the contrary, over the long term, equity gives the best returns. Besides, an investor with a long time frame has the time and ability to ride the ups and downs of the market.

Sure, the Public Provident Fund is one place where you can put your retirement money or even some long-term bonds. Do remember, however, but equity can help give you much better returns. Even if you don’t want to buy shares directly, you can invest in equity mutual funds. Look at some good endowment and pension plans. Remember to do good nice top ups in the retirement plans at least.

Myth 5           I won’t live long after retirement.

You don’t know that at all. The life expectancy in India is improving. In fact, you may well live up to 80 years, if not beyond. So, even if you retire from an active working schedule by the time you are 60 years old, you still have to provide for the balance 20 years. By the way you remember your wife’s cousin whose grandma lived to the age of 97? Can that be you or your wife?

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