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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