Ask somebody about retirement planning and they tell you that it is far away, it is too uncertain, it is…and lots more nonsense…then they come up with this:

Did you not write in your blog the following:

So Retirement Planning 101, let us say consists of the following things:

1. Knowing when you will retire.

2. Knowing how long you and your spouse will live.

3. Knowing how much you will spend in this period

4. Knowing how much your medical expenses will be.

Sure I wrote. I am so so happy that you read that. Now see what I have to say:

You CANNOT CONTROL any of the factors mentioned above nor can you guess those numbers (it is an exercise in futility)..so you have to be ready for death (keep your will handy, TODAY) BUT make sure as though you will live to 110 years.

So what should you do?

Here are the MUST DO options for increasing  the ending retirement balance the most:

1. Start saving earlier (I have said this a trillion times I am surprised you are not sick, BUT, still not doing)
2. Get a higher salary (or a higher income anyway)
3. Increase INCOME by 11% annually rather than 9%
4. Save more, and convert savings to Investment (sip did I hear?)
5. Maxing PPF is a bad idea before your age of 55. Till then put much more in ELSS.
6. Use a sensible adviser who helps you cut costs in the long run.
7. Get financially literate
8. Retire later, and help the Power of Compounding.

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  1. sir
    increasing salary every year by 11% may be difficult but we can at least try reduce our expense by 10% every year

  2. Subra,

    One of the most important thing is ‘where we live after retirement’. If we live in the village (rather in living in Bangalore or Mumbai) with nice farm land with farm house, growing required vegetables, grains, milk etc in the farm itself obviously not only reduces the expenses but also brings income.

  3. @ap: your idea looks good on paper. However, many of us are so accustomed to our current location that we cannot relocate out of choice. The convenience that we get daily (like milk, paper, ironed clothes, flowers, etc at our door step) in Bangalore or Mumbai may not be there in some other cities.
    However, I do agree that financial sense lies in what you are saying. The pollution is less in villages and hence the medical cost MAY be less.

  4. ap,

    i apologize if i am upsetting you

    but i only laugh seeing city people proclaiming they will retire to village growing vegetable and getting milk

    do you know how much hard work it is ? have you tried milking a buffalo or putting the nose rope for a young calf ? can you manage 5 climbers putting down 1000 coconuts in one day ?

    my grandmother was active till 75 years managing our fields and cows in my village singlehandedly. she will wake up at 4 and go to bed at 9.

    she actually used to say staying in madras is more relaxing than our native place.

  5. @IamNoSpecial: I agree with you.
    @lakshminarasimman : I respect your opinion. But, living in villages means, we need not do all work ourselves. We can get man power for minimum wages their to do the activities. We can overview the work and involve in the activities possible from us. Ultimately, we need to enjoy what we do, it will make us to treat the work as easier.

    As you mentioned it may not be possible for every one to shift to villages for retirement life. But, those who are from village background and have fields can seriously consider this option. More over, they can plan way before the retirement and make the arrangements there by planting various trees, constructing farm house and growing grains by keeping work men there by visiting to the place often. Once after retirement everything would have already set and locating will be very smoother.
    Thanks for giving your view on this.

  6. @lakshminarasimman Rightly said. A lifetime city-slicker cannot even dream about staying anywhere except maybe 1 or 2 largest cities in India, forget about a village. It’s deceiving yourself that after a lifetime of 24hr shops, 30 min home-deliveries and high speed internet, you will suddenly be at home milking cows and making dung patties.

  7. Hello Everyone

    I have a scary picture than most of you guys imagine. Villages are no more what you fantasize today.

    The cost of living in a village is just below city levels. Its not too low, may be max 20% below city levels thats all.

    1. Cost of most commodities in villages are the almost the same in city. (max 20% less). Daily need products.

    2. Village does not guarantee health, maybe physical activity can help in that front but air /water purity is just the same, with increasing industries. People in village are drinking bisleri water, they have as much strength as you and me have.

    3. Security is a concern in villages, unless you live a villager life. Still its a problem. If you have lived in gated community all your life, forget about staying in village.

    4. Villager has a tough lifestyle which most city people cannot adjust unless exposed from teenage / youth age. Whatif a snake visits your backyard, how would you tackle it. Its a regular thing for a villager but not for you.

    5. How will you adjust social needs of meeting / talking / passing time with like minded people which you wont find there. If you want to stay home browsing high speed internet, why stay in village, city is much better, nobody will ask you questions.

    Praveen

  8. Even if you are from Village background you cant hope to move back. Have you ever milked a cow, made dung patties, grown veggies ever…How much hard work goes behind this. Have you ever liver without power for even an hour? Even small cities are no good. Goon power usually rules in these areas. Think of this if you really own a good house in a tier 2 city (not a village specially UP/Bihar). I am planning to move to my ancestral home post retirement coz, its a tier 2 city, we own a really nice house, its very well connected to Delhi, we have a very good social circle in home city.

  9. @ap: Have you done any bit of farming? or just theory? The biggest problem today in rural area is non-availability of reliable manpower. Most of them are leaving for better opportunities elsewhere. Why do you think people are investing so much in machinery in agriculture?

    Also, having manpower staying and doing all kinds of job and you enjoying the money is a pipe dream. If you have been a white collar job holder all your life, don’t imagine that you can handle the grind of farm work at the age of 50+.

    Having money doesn’t equate to getting job done.

  10. I lived in village(TN) till my engineering and currently staying Bangalore.In my experience most of city things are available in my village too.ATM’s,DTH,3G,Cab/auto on call are available. conveniences,essential and emergency services(Thanks to 108) are available @ a 15 – 20 minutes drive (The same takes 30 – 60 mins @ Bangalore). Vegetables, rice and other farm produces are cheap if you or neighbors produce it.Air and water are equally /slightly less polluted than city.Power supply in my village is slightly better than Bangalore now 🙂
    To me its not a binary answer, But you can think of this option if you are from a village background, for others its not such an easy option.

  11. Forget about relocating to villages, most city dwellers will not be able to adjust to semiurban/ smaller towns as well.

    Also, unlike in US where people sell big houses and move to small houses on retiring /after kids leave; in India downsizing rarely happens. Very few people will be willing to sell 3 BHK houses on retiring and move to a 1 BHK in India. They will find it embarassing to do it.

  12. Few more points not to disagree with any body. Respect all your opinions. Just for sharing.

    1. Vegetables, Grains are very cheaper compare to cities. And you will get chance to buy directly from the producer.

    2. Water is polluted every where, because due to not only increase in industries but also fertilizers, pesticides used in agriculture ultimately reaches the water sources. So, have to use purified water wherever we live.

    But, in rural India, we can get good air comparatively.
    Health is not guaranteed on the basis where we live. Quality food, better diet, regular exercise can make our health better.

    3. If we live in gated community all our life, then where is rural background? so not an option.

    4. If snake visits our backyard, rural guy would know what to do!!. I really agree here. Not only snake many annoying things may occur, ready to learn new things. I hope one or two good workers may guide us in these situations. Over the few years, we will be ready to handle many rural scenarios/situations.

    5. There will be a festival, fair on every Monday!!. We need to check whether we have enough time to attend. Obviously to find like minded people is difficult, but there are plenty of people who are growing grains like us, communicate with them, exchange ideas, visit their farms, experiment in our fields.

    6. Yes. Busy with cattle, sheep, hens and crops in fields. Not getting time to watch tv show. No worries about power cuts. Any how, Sun is there. Install a solar power set for all day power. We can sell the excess generation to govt.!

    7. Getting work done by work men means, involve in the work with them, understand, learn the techniques and experiment and get experience. Over the years will become better ones.

    8. Internet speed is really required to research about the things we are experimenting, but 2G working good if we are little tolerant. But, over the years it will get better. Ten years back, there were no mobile towers/signals in rural side. Now every villager is having mobile phone.

    … many more.
    Ultimately, living in villages after the retirement is better and feasible option to the people who are from rural background means, who have born and brought up in village and working in cities after graduation and will be visiting their fields often to keep in touch with fields or village community.

    Those from gated community, definitely it is difficult.
    Therefore, living in rural India or urban India after retirement is obviously having their own pros and cons including financial aspects. Ultimately it left to each individual how to live their retirement life whether it is early retirement or fifty+.

  13. Leave out rural areas…how about living in Tier 2, Tier 3 cities compared with metro….would definitely a viable option for retirement life

  14. I think all comments are misdirected, missing the basic argument of retirement planning.

    I have a small farm near the place I stay and work. i grow vegetables and fruits on this farm, using locals for the labour. The cost of the vegetables is almost twice the cost at which i can buy them from my vegetable vendor. fruits are more even expensive. The quality is mixed and the produce is often too much when it comes, not one- two kgs per week what I need. Forget it. Pl do gardening as a retirement pass time but not as a cost saver.

    I feel the real benefit of these posts from Subra is that it makes aware of the various issue related to retirement planning. No one solution will apply to all as individual situation differs. However, by reading these posts and other material on the net, you can prepare better and also handle your finances better after retirement.

    I am going to retire soon and will thank Subra for his valuable insights. He specialises in not giving you direct answers but makes you think. This is better way of making people plan themselves.

  15. i think, one point is left out in discussion for shifting to village life , that is , you can’t buy agriculture land, if you are not holding agriculture land (i.e. you need to be a farmer at least on paper!)

  16. One key fact that nobody has discussed is this:
    With good medical care, we can live a fit and disease free life for most of our life. Then why should we endure a painful and miserable life towards the end of it?
    Modern Medical care can keep a person alive almost indefinitely with all sorts of intervention/ICU care, but at what cost? Is there a point to extending your life by burning up all available money when you know that you are not immortal?
    Therefore I propose that like Bhishma, each of us needs to have the final exit plan ready long beforehand. I mean, if we can purchase life insurance and prepare a Will, we can surely do this also. Not sure what are the legal mechanisms, but befriending a local doctor to ensure he can make it look as natural as possible can help.

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