I am amazed with these 2 questions – who should plan their retirement, and when should we start!

Seriously, Retirement planning is for everybody – and everybody should have started yesterday! Everybody seems to have an excuse as to why they do not want to plan their retirement.

Doctors: I will work till I drop dead, so I do not need a retirement plan.

Policemen: I will drop dead at age 62, so I do not need a retirement plan.

Ifa: I will not retire, will work till my very end. And I have trail commission…

I mean gimme a break. Retirement is not always optional. Many times it could be forced on you by various factors.

Even assuming you will be fit as a fiddle till you drop dead, you need to plan for retirement for your spouse!

So get off your bum and get started. The earlier that you start, the better you ……..

I have met very high income people unable to create any wealth. They are rich – make no mistake. They earn well, and spend well. They have not created any wealth for themselves. That is all. Such people cannot retire. I have met small businessmen, CEOs, CXOs and many of that ilk who have no wealth created for themselves.

On the other hand I have met mid to lower level employees with an amazing discipline and have created a nice amount of wealth. Obviously this has happened to these people because they knew somebody who is an investor and they listened to him or her.

Why do people spend without creating any wealth? Simply because they had no understanding of the connection between earning, taxes, saving, investing, wealth creation – and obviously retirement! This has nothing to do with the amount of money that they have. It is a clear case of understanding the Money language and money management skills!

Retirement planning means estimating what the future is going to look like. Even if you are retired now, you still need to get a sense of what your retirement will look like 10/20/25 years ahead. Let me warn you – this is scary and tough!

That means, talking about predicting a future – with all its uncertainties! Not only are they currently unknown, they are unknowable.

How long will you live?

How much will it cost you to live?

What about health expenses and medical expenses?

Where will you live? From what age to what age?

How long will you work?

How much will your investments grow?

How alert will you be to manage your investments?

Will your spouse be able to manage the investments if you are not able to?

These are all things which are impossible to be sure of. We can guess and pray.

Most people do not even read beyond this! This is like facing a tiger in the forest. You are on the ground, barefoot, and 20 feet away. You then say ‘whatever is to be done, will be done by the tiger – why bother’?

Obviously wrong conclusion!

The solution for many people is to think that they have done their best and hope for a good result. What Iam  suggesting is to take a scientific approach and create a plan which may not be perfect, but is better than having no plan at all.

Sure, you may aim for the sky and reach the tree top. Better than not even knowing in which direction you are supposed to go or going!

How can you plan without having some thing about the future?

a. Estimate the future based on what you know today – interest rate, inflation, medical expenses, etc.
b. Revise as the situation changes – keep looking at the numbers on a regular basis
c. Re-run your plan every few years even if your situation doesn’t change just to make sure you are still on track.

Is it perfect? No. Is it better than nothing?

Yes!

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  1. Excuse and procrastination won’t work. Planning and risk Management are key drivers for wealth creation and management. Failing to plan means planning to fail. Overall risk (known unknowns and unknown unknowns) needs to identified & assessed for mitigating the ‘residual risk’ to ALARP (As Low As Reasonably Practicable).

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