Don’t Retire Hurt !!

Retirement Planning has become a buzz-word these days !! Every newspaper, every news-channel seems to talk something or the other about retirement planning. What is more surprising is, when talking about retirement planning, everyone is just talking about wealth one needs to accumulate for retirement. Agreed, you do need a good amount of wealth when you retire so that it generates regular income for your sunset years. But does it mean, retirement planning should just focus on the wealth creation and nothing else ?? Not Really !! I will share a small story here:

Mr. Dasgupta retired 4 years back, at the age of 58. His retirement corpus included 3 things: (A) His Provident Fund of Rs. 15 Lakhs (B) His Endowment Policy of Rs. 2 Lakhs (C) His home.

Today, after 4 years, Mr. Dasgupta is facing a post-retirement depression. He has nothing to do. He can’t sleep for all day long. He can’t even watch TV for too much time. The monthly income generated from his “retirement wealth” is too meagre for him to make any ambitious plans of travelling. At the age of 62, he has already lost interest in life and awaiting death, in spite of not having any major illness.

We need to take some important lessons from this story. Whenever you think about retirement planning, ask few questions to yourself:

1. What age do you want to retire?

This depends on the nature of your work. Just to give you an example, cricketers and other sports people retire at 36-37, whereas some politicians start their career at 40. So assess your work profile, and considering various factors, arrive at the age when you would like to retire (or stop working in the current field). This would also give you the number of years you have to plan your retirement, thereby giving you better insights for planning. For example, if you have decided that your work stress wont allow you to work after the age of 50 and you are already 38, then you know that you got only 12 years for retirement and need to plan accordingly.

2. What do you mean when you say, you would retire?

You will have to define, what retirement exactly means to you. When you answer the first question, you would also be working on this question. If you are salaried, you would stop going to office. If you are a business person, you would go to office, but may be for lesser hours. So define your own retirement as per your profile.

3. If retirement means stopping to do what you do currently, what is that you would like to do?

Most of us think that retirement is to take rest and to enjoy. Indeed it is. But we will have to do little more homework and brain-storming to find out, how many hours of a day we want to rest and how do we define enjoyment. Find out what are your hobbies for which you are not able to shell out time currently, and would like to give them more time in your retirement. If you are planning an early retirement, understand that you would not require more than 2-3 hours of additional rest than you are having now. If you are taking a 6 hours sleep currently, you wont be able to sleep for more than 8-9 hours in early retirement (unless suffering from some major health problems).

4. Which city and place do you want to stay when you retire?

The metropolitan city in which you have worked all your life may not be the best place to retire. But then to buy a big house in a remote area and staying there could be an equally bad idea. Even if you think that, post-retirement, you would not be able to cope up with the fast life of metro cities , make sure that you do not stay at a place which is too far from basic necessities like hospitals, jogging parks etc. You would be needing these places in retirement years. Some people dream of buying a bunglow at a hill-station and stay there for retirement. Before doing so, also analyse the approach to the closest city which would have good medical facilities. Also, hill-stations could be a good place when you visit it for 7-8 days. But staying there requires a pretty different kind of mindset and liking. Assess if that lifestyle would suit you long enough to settle down there.

5. What would be your lifestyle?

Higher than current or at par with current (Lower than current is totally undesirable as it would totally defeat the purpose of planning). Some people believe that they have sacrificed all their desires all their lives and now is the time to live them. Not wrong, I would say. So identify, if you are one such person. Or you are a person who would still be comfortable with the same lifestyle, with some moderate progress in the same. This also involves assessing your current monthly and yearly expenses, arriving at monthly expense figure for retirement (after taking inflation into account) and also figuring out, what would be the source of this income. For example, if your current monthly expenses are Rs. 25,000 and you plan to retire after 20 years, then a 5.5% inflation would push these expenses to around Rs. 80,000 p.m. with the same lifestyle. Now, you will also have to find out, how this amount of Rs. 80,000 will be earned by you at retirement. Since you wont be working, you will have to accumulate a significant wealth which would generate an income of this amount.

Once you are ready with the answers of above questions, try and keep following things in mind for your retirement planning:

1. Your retired life could be as long as your working life i.e. 25-30 years. Don’t be a loser by spending this life waiting for death. Enjoy this life equally (if not more) like your working life.

2. You may devote time for some social activities that interest you. You may also try playing some sports. Apart from this, if you are gifted with some special talent like teaching then you may take up some 2-3 hours classes to pass-on your talent to the younger generations. The purpose is not to earn money but to keep yourself busy and command some respect from the society.

3. Travel to places, if you love to. Make a list of places you would like to travel when you retire. Also, treat this as separate goals and arrange finance for the same during your working years.

4. Do brainstorming about your city of retirement. Assess the amount of money needed to buy a house in that city and plan accordingly.

5. Do not invest in risky assets post retirement. The time to take risks is only in your working years. Retirement years, you need to be happy with the lower returns generated by fixed deposits and government bonds. However, for that money to be enough, start building wealth for the same at a younger age itself.

We look forward to your feedback and comments on the above article. Please feel free to contact us on saurabh@nidhiinvestments.com if you have any questions. (The views mentioned in the article are personal opinion of the author. The characters used in the article are hypothetical).

Published by professorbajaj

Prof. Saurabh Bajaj is an Author, Mentor, Motivational Speaker and Wealth Planner. He has done his MBA from Narsee Monjee Institute of Management Studies (NMIMS) Mumbai, one of the top 10 management institutes in India. He holds the prestigious FRM (Financial Risk Manager) degree awarded by Global Association of Risk Professionals (GARP), USA. Till date, there are less than 15,000 professionals in the world, who have been honored with this degree. He has also been awarded CFGP (Chartered Financial Goal Planner) Certification by AAFM (American Academy of Financial Management). After his MBA, he joined J P Morgan, the second largest Investment Bank in the world. He has worked with J P Morgan as Risk Analyst for more than two years. Prof. Bajaj also holds an Advisory certification awarded by AMFI (Association of Mutual Funds of India). During his stint at Bombay Stock Exchange, he has handled Investment Management and Treasury operations of the BSE Corpus. He has set up an entrepreneurship venture in the field of Wealth Planning and Investment Consulting under the name “Nidhi Investments” and holds the profile of CEO. Prof. Bajaj sits on the Expert Panel of CAClubindia.com and MBAClubindia.com as Investment Expert. He is actively involved in investor education through his blog www.professorbajaj.com which has a readership from 78 Countries all over the world. His articles are also regularly published in caclubindia.com , mbaclubindia.com , totalca.com , charteredclub.com, bankbazaar.com and lawyersclubindia.com . He has been awarded the title of “Best Article Writer” from caclubIndia.com in Jan 2012 and has been selected amongst “Top 5 Technical Writers” from all over India in Feb 2013. He has been invited by various TV Channels like SPIN TV, CNBC TV18, UTV Bloomberg Etc for programs like "Expert Advice" , "What Markets Want ", "Budget Analysis" etc. He has been invited by Several organisations like Lions Club, Rotary Club, Agrawal Welfare Foundation, Rajasthan Mandal, Agroha Vikas Trust, Union MF, UTI MF, Arthamitra Gurukulam, Vidyalankar Institute of Technology etc for expert lecture on "Smart Investing", "Life is A Celebration", "Financial Freedom", "The Digital IFA" etc. He was ranked 8th Merit at All India level NMAT which got him selected for MBA programme at NMIMS, Mumbai. He did his MBA with Capital Markets as his specialisation. Soft Skills has become an inevitable part of every selection process and teaching learning process these days. The students from small towns and tier II cities, in spite of being talented and well equipped with technical skills, are seen struggling in the selection process. This is because of their lack of exposure to these soft skills. Mr. Bajaj has a zeal for training candidates to develop these skills and has been imparting the same on since last two years. This zeal and passion inspired him to set up his own firm called “Knowledge Circle” which aims to train candidates for soft skills. Till date, he has trained more than 5000 participants from over 220 organizations across various fields of soft skills. He has been associated with MSBTE (Maharashtra State Board of Technical Education) to conduct Soft skills training workshop for the faculties of Polytechnic Colleges in Entire Maharashtra (Mumbai Region, Pune Region, Aurangabad Region and Nagpur Region) since last 8 years. He has also been associated with ICAI (Institute of Chartered Accountants of India) for training CA Students on various topics related to Communications skills, Group Discussions etc. He was invited by Fr. Agnel Polytechnic College, Vashi for a motivational workshop for faculties. He was also invited by Vivekanad Polytechnic College for "Communication Skills and Email Etiquette" training for non-teaching staff. Apart from these, he has conducted “Capacity Building Soft Skills workshop for Faculties” at ITI Gunj, ITI Pusad, ITI Digras and ITI Umarkhed. This was the first ever soft skills workshop for faculties in the history of ITI’s in Vidarbha. He was also invited by Shivaji Education Society to conduct similar Soft skills workshops for the faculties and office staff of Shivaji Junior College Pusad, Shivaji High School Pusad, Shivaji Vidyalaya Belora and Shivaji Vidyalaya Bhojla. He has conducted training workshop on “Effective Presentation Skills” for the relationship managers of HDFC Mutual Fund, Andheri Branch, Mumbai. He has also been invited at College of Management and Computer Science, Yavatmal, College of Dairy Technology, Warud, B N College of Engineering, Pusad, B D College of Engineering, Wardha, College of Engineering and Technology, Akola, Dr.N.P.Hirani Institute of Polytechnic, Pusad etc. for the Guest lecture on “Developing Interview Skills”.

10 thoughts on “Don’t Retire Hurt !!

  1. Saurab Bhai i would say just superb piece of writing. I liked your quality of make people understand in very simple language. You choose simple language but strong message. Really another nice article.

  2. Hi Saurabh,
    A really nice article again. Simple words yet message gets across so well.
    Now I wait for new articles from you, they simply add to my knowledge/information.
    Wish you All the very best for ur venture.

    Regards,
    Namrata

    1. Thanks Namrata,

      Your words always act as great motivators to write.

      Nice to know that you like the articles.

      Thanks again for your visit and feedback. Looking forward to more in future.

  3. saurabhji, this article throws light on aspects of retirement dat most ppl do not even think of,definitely highlighted certain pointers fr me. keep writing nd kindly keep us posted.:)

    1. Thanks Yogita ji.

      Yes, I agree that most people tend to forget some aspects and thus I tried to remind them about the same.

      Thanks again for your visit and feedback. Looking forward to more in future.

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