Of course Retirement planning is easy to talk. The question is HAVE YOU DONE IT? Cooking, running, cycling, yoga, pilates, all look so easy when somebody else does it! Try just doing the warm up for kick boxing, and see it take a toll on your lungs and legs!
So there is nothing so simple about DOING ANYTHING. However people do think that Retirement Planning is simple…
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. (yet to see even a 84 year old accept that he could live up till the age of 100). I personally know of about 5 people who have crossed the age of 100 years – I expect that number to at least double over the next 5 years. Not funny, this means about 42 years post retirement. Are you ready?
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. You think I am exaggerating? Go to Pattabhiraman Murari’s Free Financial Calculators – www.freefincal.com
3. Which pension plan? well, well, that is another post, right? Maybe none. You may need a big box full of assets out of which an annuity could be one small part. Your pension assets could be Nsc, PPF, a house to be given on rent, equity funds, ….you may need a ‘retirement portfolio’ not just a retirement plan. Think hard. NOW.
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 :-).
Not a Nike fan, but like their ad which says ‘Just Do It’. Exactly my message.
Once you have set the process in motion, get a friend to check / review it. It should be a similar minded person with some knowledge, but going to a professional carries its own risks. Get it checked by a friend of similar age or ELDER to you 🙂
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