From the age of 50 or thereabouts you need to be planning for retirement. Typically you may be planning to retire at 52-65 depending on many factors of your are a few things you need to take care of:

a. Communicate with your spouse: If you think you will retire at 55 and your wife will retire at 60, check up with HER. Even if she had said so 10 years earlier, things may have changed. She may want to quit her job if she thinks she wants to help her daughter/ daughter-in-law with the bringing up of a child. When you are not sure, ask. Communication will surely help. 

b. Be ready for the unexpected: an older relatives heart treatment, parents needing medical/ other financial help, a child/sibling having huge financial problems might require intervention. Saying ‘such things have not happened to me’ is stupid, and completely believing on luck. Be ready.

c. Be ready for medical emergencies: A fire accident can set you back by Rs. 2 million before you even realise it. If you have a medical insurance for Rs. 5 lakhs, the remaining Rs. 15 lakhs will go out of your kitty. Cancer at least you have a choice – and can say I do not want that treated, for a fire accident that choice is not available. 

d. Buying some big ticket item – Electronic, vacation,…just be careful. A bad equity market with a 10 year poor run can unnerve you. Withdrawing during a poor run can hurt your portfolio real real bad. You need to be careful of such things.

e. Hoping to live only on the income: Many people think that they need not touch the principal – the dividends and interest alone will take them through. However, it is all right to dip into your capital at the age of say 75 years – assuming that you live to age 84. However, like A K Hangal if you live till the age of 98 years, chances are that your portfolio will be exhausted by then – and if you do not have kids / nephews (I know such people, it is not rare), pray that you have long living friends who are at least 20 years your junior! 

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  1. That last point was unnerving!
    What if the astrologer is wrong and one does not conk off by mid 60’s?
    Life would be easier with a use-by date.

  2. If you read the problems in Europe and US, you will realise that by 2030 (not very far away, right?) we will struggle with people living too long, but their money eroded by inflation. Remember the US and Europe went through a very long phase of good growth WITH low inflation. We will not have the luxury. We have also DESTROYED the HUF. To think the ‘common young’ will take care of the ‘common old’ is so damn stupid…if ONE specific kid will not take care of his parent/ grandparent!!

  3. Subra, on the last point…if you believe/intend to live to 98, DO NOT, under any circumstance plan to retire at 58 like the previous generations. Be gainfully employed till atleast you are 78 or so. Fact of the matter is that given high inflation rates, ANY retirement corpus that sustains present lifestyle WILL be exhausted in 20 years. So either you will become dependent on someone else after that time-period, or you will have to seriously curtail your lifestyle (even at reduced/retirement level expenses).

    I would like to suggest to ppl in their late 30s/40s today to not think of retirement by 55, rather keep yourself physically fit, mentally alert, and work in sustainable, low stress environment. Do not burn yourself out with long commutes or impossible work deadlines. Focus on continuously learning and gathering new skills, and work productively and effectively. Be happy to work for people younger than you if they are good leaders and respect you for your skills and dedication. You must remain employable even at 70!

  4. I wish to live till 65…how the h..will I know whether I will live till 52 or 98? So 2 businesses – pensions and life insurance SURVIVE on our INABILITY to estimate correctly….’end use date’

  5. Subra,

    We want you to live much longer.

    This comes from the affection we the readers of your blog have for you.

    You are doing great work.

  6. Rotten and degraded Western culture has ruined the age-old joint family culture in India. At least in a joint family there was emotional social financial bonhomie. Now children and parents are on each others throats!!! The only ppl enjoying are the glamour folks who sell this rot and enjoy with the 150 bux we spend to see them.

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