Retirement pic

“One should never get old!!” said Mr. Khanna in a disappointed voice. “Everything finishes by the time you reach 60. Its better if people have shorter lives.”

“Why are you saying like that Mr. Khanna?” asked Mr. Desai. “When you reach 60s, you can retire from work and enjoy life. Yes, if you have developed some diseases then that’s a different matter”

The four colleagues, Mr. Khanna, Mr. Desai, Mr. Mehta and Mr. Ghosh were sitting in their office canteen having evening tea. All were about to retire in the next 3 months.

Mr. Khanna continued: “By the grace of God, I don’t have any illnesses till date. But I was just speaking to our accounts department and learnt that after retirement I will be getting my PF of just Rs. 16 Lakhs. Now, when I put this in a bank FD at even 9.5%, I would get a monthly income of just Rs. 12,600 something. Now, how do I survive with such kind of low income?”

Mr. Ghosh: I have exactly similar problem. My PF is Rs. 17 Lakhs.

Mr. Mehta: But our PF amount should be close to Rs. 35 Lakhs, isn’t it ?

Mr. Khanna: Yes, but I took a loan against my PF few years back. This loan was taken to fund my daughter’s marriage. This resulted in reduced corpus for retirement.

Mr. Ghosh: So did I. I took a loan for my son’s education. Now I am left with a very small amount for retirement.

Mr. Desai: But you would have made some other investments, right?

Mr. Ghosh: I bought a few endowment policies for my retirement and for son’s education in 1989. I had taken a policy with sum assured of Rs. 2 Lakhs for my retirement and sum assured of Rs. 1 Lakh for my son’s higher education. In those days, 2 Lakhs was a big amount. However, this wasn’t sufficient for his higher education. His college fees itself was Rs. 20 Lakhs. Thus, I had to take loan against PF and against my endowment policy too.

My endowment policy will mature now and the maturity amount is almost Rs. 4.1 Lakhs (with accumulated “Bonus”). Out of this, Rs.3.8 Lakhs will be repaid towards the loan and I will get just Rs. 30,000 for my retirement.

Mr. Desai: What about you, Mr. Khanna?

Mr. Khanna: My story is even worse. I took 2 endowment policies for my retirement, one policy for daughter’s marriage and one money back plan. As per my capacity, I was paying a pretty high premium for all these 4 policies. Thus, didn’t have much scope to save anything else. Similar to Mr. Ghosh’s case, my retirement policies vanished in my daughter’s marriage. Policy for my daughter and my retirement policies put together fetched just Rs. 4 lakhs. Thus, I had to take a loan against my PF for her marriage.

I am just thankful to God, that the groom family didn’t ask for a dowry. Or else, I would still be under a heavy loan.

Mr. Mehta : Then how come you spent Rs. 21 Lakhs in your daughter’s wedding ??

Mr. Khanna : In our community, it is mandatory to have a grand wedding ceremony Mr. Desai. Every person who attended the wedding said that it was one of the best weddings. Doesn’t a father dream that he celebrates his daughter’s wedding in the best possible way?”

Mr. Desai : Well, may be. But the question is, if that was your aspiration, why didn’t you plan for it properly? How can a grand wedding ceremony be a justified expense at the cost of your retirement?? Tomorrow the same people will attend some other wedding and say the same words. Then what ??

(Mr. Khanna had no answer to this)

Mr. Mehta: And, what about your money back policy? Why did you take that?

Mr. Khanna: That policy paid me “some” money every fifth year which I utilised for usual expenses like house repairs etc. I think it was a big mistake too.

Mr. Mehta : In that manner, I did one thing wise. But don’t know if the other thing went wrong.

Mr. Khanna : Let me guess, you didn’t  take a loan on PF.

Mr. Mehta : Actually I did. But good thing is, I didn’t blow off too much money in daughter’s marriage. I got her married in a very simple manner. But I took up a loan to buy a plot for my retirement. Someone told me that real estate is the best investment for retirement and so I did that.

Mr. Ghosh : You lucky man. So now why are you worried?

Mr. Mehta : Problem is, from last 12-14 months, some unauthorised slums have encroached the plot. Since the plot is somewhat in a far flung area, I was not able to visit it regularly. One fine day I came to know that the encroachment has happened. I have lodged a police complaint but nothing has happened till date. Even if I file a case in court, I don’t know how will I fund my retirement till the date of judgment (assuming that the judgment happens in my favour). I also have one ancestral property. But due to this slowdown in Real Estate market, I am not able to sell that as well.

Also, as I had these 2 properties, I didn’t buy any policies or did any other savings etc. I just lived life kingsize. Gave everything that my wife, kids asked for. I didn’t save anything separately for retirement, thinking that this plot will solely fund my retirement. I now realise that I should have planned much more seriously for my retirement.


Mr. Desai : So what you understand here is that, there are 5 primary reasons why we run out of money by the time we reach our sixties.

  1. Blowing money in children’s marriage: Although it’s a great day in a father’s life, it is no excuse to blow off unreasonable amount just to “oblige” the society. We are responsible for our retirements and we need to save for it. If at all a “grand wedding ceremony” is a necessary goal, plan for it separately in growth assets.
  2. Not availing educational loan for children’s higher education: Once we have funded children’s school and college education, we should let them get an educational loan. They can get a loan for education and have a lifetime to repay, but we can’t get a loan for retirement. Again, if at all, we want to fund our children’s higher education, we can’t dip into retirement money. It needs to be planned separately ever since the child is born.
  3. Investing in traditional products: Some of us save a part of the income but “invest” it in traditional products like endowment plans, money back plans etc. These traditional products fail to give good returns. In fact, we get negative inflation-adjusted returns from them. We need to invest in growth products which will give higher returns than inflation so that we can create a sustainable corpus for retirement.
  4. No Diversification: Some of us put all our life savings in one real estate project thinking that it will help us survive our retirement. However, something goes wrong with that project and we are left in limbo. We need to have a diversified portfolio so that we can minimise our risks and maximise our returns.
  5. Not Saving for retirement: Some of us believe in living life king size. No doubt we should enjoy our life and also fulfil needs of our family. When I say needs, I am putting “wants” and “demands” aside and will fulfill them very judiciously. This is because, when you run out of money while approaching sixties, each unnecessary expensive toy given to your kid will start pinching you.

It is our utmost responsibility to save and invest at least 15% of our income solely for our retirement.

There has been a trend of old age parents being deserted by their children as they cannot financially support them. But if we want to curb this problem, the first step is to start saving and investing for our retirement. So this is not only a social issue, but a case of lack of planning.

Tomorrow, when our children grow up, they will have enough liabilities including household expenses, home loans, children’s education, self-retirement etc. Let’s ensure that OUR lack of planning doesn’t mess up THEIR finances.

Last but not the least. Retire from Work, not from Life.

P.S : The above article is written by Prof. Saurabh Bajaj and was first published on

Author: Prof. Saurabh Bajaj is CEO with Nidhi Investments, Mumbai. He has been actively involved in writing for investor awareness since last 6 years. His articles have a readership from 64 countries across the globe. He may be reached at for any queries.







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