Well it works in advertising. Convincing you that if you drink the same cola as Sachin Tendulkar you will become SRT, or driving the same car as Shah Rukh Khan will make you Shah Rukh. Well, if you still think so, you will not.
Let us see some Retirement planning myths:
1. I can start saving in my 40s: wrong, wrong, wrong. The power of compounding (most financial planners will do well just understanding this) is clearly urging you to put TIME in the bank – not just MONEY. Remember the full name of my book is “Retire Rich: Invest Rs. 40 a Day”. This works only if you are starting out at 23, if you start at 43 it will be more like 4000 a day.
2. I will have one crore when I retire in the year 2030, and that will be sufficient: Sure, depending on how long you expect to be retired! say 10 years? After that what? Either you know how much you need or you are guessing. It is a very difficult figure to arrive at, and that too after tons of guessing. If you have not gone about it scientifically, stop guessing.
3. My Provident fund will be sufficient: Absolutely wrong. My father had got Rs. 6 lakhs when he retired in 1989. Now his annual expenses are about Rs. 4 lakhs. Provident fund is just not SUFFICIENT. You need to supplement it with other assets.
4. I know people who have retired at 53….and are enjoying their lives: Sure, you know of such characters, welcome to the world of retirement. However, do you know hos many people are now GOING back to get jobs? 3 people I know have made a hasty retirement decision and are now repenting – 2 have gone back to jobs which pay HALF of their previous drawn salary.
5. Post retirement life will be great: Look if you are a workaholic without hobbies, and very few friends outside work, life would be terrible, not wonderful. Develop friends, groups, hobbies with friends across gender and age groups. It is the only hope of survival. It is all in your hands, though.
6. I will spend more time with my children: Really? Hey stranger when you were doing all that corporate travel, board meetings, bored meetings, targets, etc. your kids just grew up. They are in no mood to spend ONE HOUR with you everyday. They need you around to pay bills…etc., they love you, …but one hour, give them a break.
7. My debt portfolio is sufficient: Super myth. Just because your father, or father in law had a full debt portfolio you cannot do the same thing. Wake up and smell the coffee. You will need equity in your portfolio – remember if you retire at 50 and live till you are 89, we are talking 40 years! Inflation will maul your debt portfolio. Real maul.
Well there are more…but suffice for a day I guess!
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