Most of us cannot estimate our expenses at retirement. Even people who are now 80 cannot say with certainty how much money they need for the remaining part of their life. I was set to think by a tweet of a senior person in the asset management industry. I quote (please pardon me for the trumpeting of my book, just producing it verbatim..and as best practice masking the sender’s name.

My granny s one hospitalisation bill is more than Her lifetime savings Health Insurance Cover is so under rated

s emphasis on being ready for Retirement and his book “Retire Rich* is a Must Must Read

This tweet appeared yesterday…and many people must have seen it on Twitter.

Most of us are very poorly prepared for ‘Retirement’ and this includes people who have been in good finance posts! Why does this happen?

Simply because about 10-15 years ago longevity was not as big an issue as it is today. Even more bad news is that it is getting worse. More people are going to live beyond 100 years of age. Is it a big problem? Yes of course. In China we have 70 year old children killing their 96 year old parents – the younger old man is tired looking after his ‘Old man’ !! Of course people will run out of patience, and money to look after his parent who did not leave enough money for the upkeep.

Sorry for the digression. Re-read the tweet. One hospitalisation wiped out her entire savings. Luckily she has children and grandchildren who are well off and will pay for her future needs. WHAT IF SHE WERE SINGLE OR CHILDLESS? WHO will look after her in her old age – especially if she did not have insurance or a bank balance.

Some companies like Ashok Leyland gives medical cover for the employees for the rest of their lives, but most companies do not. Even worse, what about expenses that are not covered by insurance.

What if you have dementia + Alzheimers and are bed ridden for say 12 years? I am talking about a real life case, and hence he numbers may be a little imaginary, but the facts are not.

This couple were lucky to have a son, daughter in law, and 2 grandchildren willing to look after the man for 12 years. His wife could not have even thought of doing this. Their only asset was the house in which they lived – the other assets were whittled down long ago. Now look at the expenses:

2 nurses (day nurse and night nurse) – currently they cost about Rs. 1000 per shift in Chennai, Rs. 1200 in Pune, and about Rs. 1600 in Mumbai

Diapers – 3 a day – Rs. 250 per day.

Medicines – largely vitamin, blood pressure, and diabetes.

Now this comes to Rs. 3200 per day is Rs. 100,000 per month per person (if you have parents BOTH needing such service, God help you.

Diapers Rs. 7500 per month.

Hospital bed: Rent Rs. 6000 per month (guessing not sure)

Pulse monitor, gloves, powder (avoiding bed sores), ……..and a whole host of small needs which we ignore) Rs. 5000.

This totals up to Rs. 100,000+7500+6000+5000 = Rs. 120,000 per MONTH per PERSON.

This is not a small amount. In the tweet above the person says “Hospital …insurance”.

Of course medical insurance is important, but remember this amount of Rs. 120,000 per month for 100 months is Rs. 1.2 crores. Tough to believe right?

Now go figure how much will you pay for a supervisor who looks after this person in a Senior citizen facility.

Well Mr. Tweeter, these expenses are not even covered by medical insurance.

Simple. This money has to come from the wealth that you have created. Remember when me or otherĀ  writers say “You require 1 Million US $ for retirement” most people are in denial mode.

So the tweeter has to provide Rs. 1000 crores for Vi##an, for his parents, for his grandmother, and then of course for himself.

IF HE WERE TO PUT THIS AMOUNT IN A BASKET, it is EASILY the BIGGEST asset that he will ever buy – not his vacations, house, car, yacht…….!!

 

 

 

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  1. Actuals for my mother in middle stage of Alzheimer’s: Living in the outskirts of Hyderabad in own house, and in the caregiving of a very dutiful working daughter: Full time nurse-Rs. 20,000 per month(nursing costs can vary as per wish and requirements); diaper cost- 3 X 30 – around 100 per month- Rs. 300 X 10 = Rs. 3,000/- month( online buying gives optimum prices). Medicines as per requirement ( she is lucky to have her husband’s very benevolent PSU ex-employer providing life time medical care- definitely not possible for our present generation). Other expenses about Rs. 7000 per month. So the average comes to about Rs 35,000 per month( assuming medicine expenses of Rs.5,000 per month). This is from a typical PSU/ Govt. Service middle-class household perspective in a middling city.
    Putting these figures on the public domain not to contradict Subraji but to give an actual middle class case which might be instructive for some readers.
    Subraji’s points are very valid that end stage care is becoming very expensive.
    Also, values are shifting due to nuclearisation of families, so expecting the next generation to bear the caregiving burden might not be rational.

  2. Like in one of the yakshaprashnam, you keep telling us this truth everyday and yet we go about business as usual. The math is simple yet eye-opening

  3. Subra sir,
    you are making us s**t scared. The items you mentioned, classified into two parts
    (a) money too may not come to your rescue (one is disabled and others, friends, children don’t give a damn)
    (b) You have the money and money may come to rescue you, but the corpus is just too much to procure.

    Either God helps.. Or nature takes it’s course and we die & rot like other animals unable to fend for ourselves. No point in predicting panic and running to secure un-achievable targets and out-of-control future. We try our max to build a strong corpus and lead a healthy life, leave the rest to Him ..

  4. With due respects ,even 2 month hospitalisation of my uncle has set his family back by 3 lakhs per month.
    They used to buy shares as far back as 30 years.
    I heard the family is selling shares and closing FDs to meet the expenses.
    Uncle was earning businessman even a couple of years back.
    This is a struggle for upper middle class family with son at hand doing his best caring for his dad.
    Shudder to think of variations -(1) longer hospital stay,(2)no family kitty (shares),(3)Senior citizen is not working after 60,(4)son not at hand to render help.
    Besides the finance angle the other factors can tell on the family.

  5. It was a known fact from US that the highest expenditure that a person makes is in the last one week of his or her life.
    At the end of it all it’s a zero sum game.
    As Dalai Lama says… You were your health till earn money and then spend that money to regain your health.
    Important is to do everything in your means to have a healthy and a vibrant mind and brain… the body will follow. Don’t wait for this grill you become old. Start early. Chances are you would have a clear head at designing your finances as well.

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