We
plan our vacations perfectly… but what about retirement?
By
S. Anantharaman, Financial Expert
“Most
Indians plan their vacations better than their retirement.” This simple line
reflects a powerful reality. A 58-year-old corporate employee once said, “I
earned well throughout my life. But I never imagined retirement would arrive so
quickly. I spent freely without setting aside anything specifically for
retirement.”
Today,
because he failed to plan properly, he depends on his children even for
essential expenses. This is not an isolated case—it is a common story in many
households.
Retirement Planning: Often
Postponed
Many people
delay planning for retirement—not out of irresponsibility, but because it feels
far away. Current lifestyle expenses seem more urgent, and there is often a
belief that income will somehow continue.
However, in
financial planning, lost time can never be regained.
Retirement Is Not an Age – It
Is a Financial State
Retirement
is not just about turning 60. It is the stage when income stops—but expenses do
not. In fact, many expenses increase:
·
Medical
costs rise
·
Cost
of living increases due to inflation
·
Value
of money decreases
·
Financial
dependency grows
The biggest
risks in retirement are living longer and running out of money. If you have
sufficient savings, longevity becomes a blessing—not a concern.
Common Mistakes People Make
1.
Starting
Late
Time is the
biggest asset in retirement planning. Starting at 30 vs. 45 can create a
difference of crores.
2.
Underestimating
Inflation
If your
current monthly expense is ₹50,000, it may rise to ₹1.5 lakh or more in 20
years.
3.
Ignoring
Medical Costs
General
inflation may be 6–7%, but medical inflation can be 10–12%.
4.
Relying
on a Single Income Source
Depending
only on one source (like rent or interest) increases risk. Diversified income
sources are essential.
5.
Not
Reviewing Investments
A one-time
plan is not enough. Review your financial plan every 2–3 years and adjust when
needed.
Longevity: A
New Challenge
Life
expectancy in India is increasing. If you retire at 60, living till 85–90 is
quite common. That means 25–30 years without active income.
To maintain
a comfortable, inflation-adjusted lifestyle, many may need a retirement corpus
of around ₹5
crore.
How Much Should You Invest
and When?
Let’s assume
a target of ₹5 crore by age 60, with an average annual return of 13% through
equity mutual funds via SIP.
Monthly SIP Required to Reach
₹5 Crore
|
Starting
Age |
Investment
Period |
Monthly
SIP |
|
30 |
30 years |
₹11,500 |
|
35 |
25 years |
₹22,500 |
|
40 |
20 years |
₹44,500 |
|
45 |
15 years |
₹91,500 |
This table
highlights a crucial truth:
Even with the same return, starting early drastically reduces the
investment burden.
This is the
power of compounding and the value of
time.
Steps for Effective
Retirement Planning
·
Clearly
define your goals: retirement age, monthly expenses, and lifestyle
·
Account
for inflation: assume at least 6–7% general inflation and 10% medical inflation
·
Ensure
adequate health insurance coverage before retirement
·
Build
multiple income streams
Final Thought
People
meticulously plan every detail of a short vacation—travel, hotel, expenses. But
they neglect planning for the longest “vacation” of life—retirement.
Retirement
is not something that begins tomorrow. It is something that must be planned
today.
Time
is your greatest investment—don’t waste it.
Now ask
yourself:
“Am
I waiting for retirement… or is retirement waiting for me?”
Anantharaman S,
Financial Professional
Mr. Anantharaman
S has been reached at avs.anantharaman@gmail.com and 90037
45876
Mr.
Anantharaman S, Financial Professional with over 20+ years of experience in
Asset Management Company, Wealth Management, Retirement Planning, Investment
Advisory and Long-term Financial Solutions. Views
are his personal.
Read articles written by Anantharaman S, Financial Expert in Nanayam Vikatan, Aval Vikatan
and Vikatan.com a leading personal finance magazine : https://bit.ly/4c2sbth
Disclaimer: Mutual Fund investments are subject to market risks,
read all scheme related documents carefully. The past performance of the mutual
funds is not necessarily indicative of future performance of the schemes.
