Plan for your retirement ahead of time to choose the life you want live during your gold years……Retirement is a beginning and not an end!!!! Now-a-days if we get a blessing from an elder – “jug-jug jiyo”, many often say “aashirwad dena ho toh yeh do ki sada khush raho, jyada ji ke kya karna hai”.
Can you imagine yourself living till the age of 100? This statement has two emotions – joy of living long and sadness of living too long. Yes, believe it or not, one of the biggest risks in our lives is going to be “risk of living too long”.
As per the latest report released by ‘Union Ministry of Health and Family Welfare’ shows that average life of an India has gone up by 5 years in last one decade. An average Indian male is now expected to live till the age of 67.3 and Indian woman is expected to live till 69.6 years. When we say average age, it implies that if you are born now, you are expected to live till that age. But one might not live till that age or one might live beyond that age.
Living too long is a big risk
Mr. Akash aged 30 and Mrs. Sunita, aged 27 are a working couple. Akash works in a private bank and Sunita works as a teacher in a nearby school. As any young couple, they love to live their life to the fullest by spending on wants such as frequent outings, switching gadgets etc. Planning for retirement is just not there; in their radar of activities.
Now assume they will live till the age of 90!!!The question here is when will they stop working? If they were to retire at 60; how will they manage their living post retirement? 30 years without pay could be real scary.
Retirement planning should not be ignored!
What is retirement planning?
It’s all about accumulating money to live comfortably in your golden years when you donot enjoy advantages of pay checks. Retirement brings space and time that a working life makes difficult. Enjoying a quality life during the retirement requires significant savings. In a nutshell, it is all about having a SIP-SWP plan.
What is SIP-SWP Plan?
SIP is Systematic Investment Plan and SWP is Systematic Withdrawal Plan. Nothing beats this combination and it’s simple to implement.
Assume that Mr. Akash and his wife were to start saving a small amount of Rs. 5000 per month and agree to increase this savings by 10% on a yearly basis and invest it in debt equity combination portfolio which would fetch them 12% returns.
All they have to do is to make sure that their investment strategy aligns with their retirement timeline. It is assumed that what they were to put in first month would be withdrawn in the first month of retirement which is 61. Following table would help you understand better.
|Age||SIP amount||Age||SWP amount|
|31||₹ 5,000||61||₹ 1,49,800|
|32||₹ 5,500||62||₹ 1,64,780|
|33||₹ 6,050||63||₹ 1,81,258|
|59||₹ 72,105||89||₹ 21,60,259|
|60||₹ 79,315||90||₹ 23,76,285|
The figures above are astonishing. Think about it; just a saving of Rs. 5000 could make you a lakhpati in your golden years. This is nothing but the power of compounding which enhances with time. So all you have to do is to have a long term investment horizon and stay invested.
In an age, where joint family systems are dying, job are becoming extremely stressful, medical advancement are on rise, it would be extremely important to start planning for retirement. The early we start, the more we will have with us for our golden years.