Even just 50 years ago – when my father was in his 40s – retirement was not such a big issue. Remember that our hunter gatherer was worried about survival. Even in 1947 the average age of death was just 28! Why would a 22 year old expecting to die at 28 think of retirement?

So let us identify the problems –

we are not realising that we could all live up to 100 years, and our kids could live to 120!

we have killed the Joint family

we think we should deal with problems sequentially

we live far beyond our means

I am not keen to argue against the data available in the country. Those people born before 1947 (when the avg age of death was 28) – are living till the age of 100. So we cannot take one average and think we all will live till that age ONLY. The standard deviation, mean, median, mode could be very different. We need to plan for life till the age of 100, not 72 which is the current average.

We have killed the Joint family – enough has been said by enough people.

We deal with our problems sequentially is a very serious problem. In our 20s we are planning our bike, car, career, and having fun. In our 30s we just start wondering about the bigger car, foreign vacations, and making a downpayment for a house. In our 40s we are paying for our children’s education and we think about our children’s higher education, their marriage..and then plan for our retirement in our 50s.

My take for the kids of today is don’t short change retirement. It is difficult to create a retirement box which has to last from age 55 to age 120! So it makes sense to start with a small amount – Exactly as my book says “Retire Rich: Invest Rs 40 a day”. Start small, but start. Maybe keep increasing it by 10% per year and make sure that you do not touch it for the whole journey.

In fact, even as your attention is drawn to more immediate goals, don’t IGNORE retirement. Maybe you are not able to save (invest) 12% to 15% toward retirement in your 20s and 30s. Try to save as much as possible, that is the call.

The earlier you start saving (and investing of course), the longer your time horizon will be – the more time you will get to grow your money.  In addition to having more years of saving regularly, you can take the risk of investing more in equity and potentially earn higher returns. You will also get the chance to fund your own Voluntary Provident fund at a later date. Remember the money grows well when it is tax free and remains untouched for say 30 years! If you invest well from your 20s onwards, you will give yourself more options. You may reach your late 40s or early 50s and discover that you . are comfortably on track for retirement.

I am not suggesting a life in penury. You are not poor for sure. However, try to get into the saving habit which should be converted into Investment. It is your generation which will live for 35+ years in retirement. This is not small. Unlike the caveman who could think on a day to day basis, you need to think of Wealth creation over months, decades, and generations!

 

 

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  1. If average lifespan is 70 years, then average is calculated on entire population size. it also includes all the people who died at a young age say 10 or less. If you have crossed the 10 years age, then you have excluded the probability that you will die at 10 years or less already. and post 10 years, and you have to consider a new sample space. So, new probability you will live longer than 70.

    Like in Bayesian probability. An urn contains 5 green balls and 5 red balls. If one were to take out a ball at random P(Red) is 0.5 at the first attempt. A ball is drawn and it turns out it is Red. In the next attempt P(Red) = 4/9. (not 0.5). Likewise what is your lifespan (new) given that you already crossed age of 10 years? It is a different figure.

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