When people tell me Retirement Planning is simple, I tell them the following.

Of course it is simple, all you have to do is the following:

1. Estimate how long you will live.

2. Did not start investing when you were 25, 30 or 35? Now you are 54 and worried? Simple save about 35% of your gross salary in a pension plan.

3. Which pension plan? well, well, that is another post, right?

4. Now the money that you are putting away CANNOT be touched for your kids education, marriage, illness of self or spouse, buying a house, car, etc. – it is a RETIREMENT plan, you dummy!

5. Ensure that you or your (contributing) spouse is not laid off, or is not too sick to work till you are about 70.

6. Hope (and pray) that your fund manager gets you a REAL RETURN of about 3-4% p.a. till the rest of your life.

7. Buy an annuity without return of premium in such a way that you spend the last rupee as a tip for the pall bearer.

Well, well, it is not difficult, I am sure.

But when a person says ‘Retirement planning is complicated’ I say the following:

When you are 25-30-40-50 – you need not worry about any of the above things.

Just get into a nice portfolio of good well managed funds and keeping growing your money in real terms. Once you touch 70 years of age many of the things above will not be very difficult for a planner – or for your own self to do.

So either way, do something, do not just sit there doing nothing 🙂

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  1. At every opportunity I ask senior citizens if their pension/annuity is sufficient for them(the Marina is a great place for this!).
    Great way to end a conversation as many get too embarrassed to talk any further!

    The most common response was: “I used up a large portion of my benefits for my daughters marriage”

    I know of families where sons or daughters shell out 30-40K each month for years to tend to their parents. Some of then earn a decent pension. Too scary not to act NOW!

  2. why dont u scare them more by asking them to read my blogs? LOL…

    the worst case is you should talk to the senior profs in IIT – and even they do not understand the power of compounding. Then they will tell you..Oh i can teach till i am 70…Inst of Maths, Chennai and IISc, Bengaluru will use my services…etc. etc….you and I can bang it…but it is LEARNING which has to happen, not just downloads.

  3. Subra sir,

    What happens when you do not have money,let us say a government servant who has retired & now 75 yrs old wife dead & no money but has 1 son.

    What exactly happens, i know this is a stupid question, but I as 32 yr old i do not have this visibility, I can not even understand a situation where u run out of money & you are old,

    when i come to a question I can not even comprehend I ask,that is what I am doing.

    Is retirement question more of a upbringing value system or purely financial…….

  4. Manish

    i know that and that is exactly why i said IIT Prof. I know one prof. who did not know how to use the ATM – about 5 years ago. I had to FORCE the H and W to learn….:-) now they can.

  5. LOL! To borrow a phrase from you, ‘Gyan Garv’ is more dangerous than ignorance.

    In such a state, often mental constipation coexists with verbal diarrhea!

    LIC agents still give talks in faculty associations about combining two policies to maximize gains! I have given up!

  6. siddhant,

    like someone once said on these blog comments, in the past retirement meant decreasing your living standard.you went into the vanaprasthashram stage of life where you accepted the pain and austerity.
    since we dont play by those rules anymore and want to live a ‘normal’ life till death,it makes it necessary to ensure you plan for retirement and not depend on your kids.

  7. Can anyone explain when Subra Sir says
    “Buy an annuity without return of premium in such a way that you spend the last rupee as a tip for the pall bearer” ?

  8. Hi Subra,
    What you are saying makes sense. But sometimes used to think are we unnecessarily worrying about the retirement. If someone has one or more sons wouldn’t they take care of their parents? Say, their parents has decent income can’t they provide the shortage amount for them?

    I am taking care of my parents is it too much to expect from my offspring? After all we as Indians still has family values .. right?

  9. @ Shankar-you are saying this thing (about retirement) to Subra Sir who has never understated the immortance of retirement corpus.I have realised it late but as they say in Hindi ”jab jage to savera” or when you wake up then it is morning( loose translation )

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