Retirement Planning - Start Now - Save More - Retire Rich

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Retirement Planning - Start Now - Save More - Retire Rich

Retirement planning ensures that you will continue to earn a satisfying income and enjoy a
comfortable lifestyle, even when you are no longer working. An increasing number of young Indian
professionals are moving away from the traditional joint family structure. Since support no longer
comes easily, parents have realized the need to provide for themselves during their retirement years.


Until recently, many young Indians in there 20s and 30s were ignorant towards retirement planning
and were not taking it seriously. For them, retirement was some thing that was too distant.

However, smart advertisement campaigns by private life insurance companies like ICICI Prudential's
"Retire from Work, not from Life", HDFC Standard's "Retire with Pride, Live with Self Respect", and
more recent one from Ageon Religare "How much pension will you need? Know your Correct Pension
amount." have helped in increasing the awareness about retirement planning.

Your retirement planning does not end once you have taken a retirement plan from any of these
Insurance Companies. Its just a beginning, and if you start at an early age it is extremely helpful. Still
wondering why do you need a retirement plan? Here are some of the reasons :

Inflation: Due to inflation, value of money keep decreasing year-on-year, so the value of Rs.100 five
years ago was much higher than the value of Rs.100 today. As you need to worry about it, you also
need to account for inflation adjusted returns on your investments, while planning for your retirement.

Increasing Life expectancy: Increased longevity has been the greatest single benefit to Indian citizens
since independence, a benefit spread across all states and income levels. The life expectancy, as on
2007, for males at birth is 67 years and 71 years for females. The globalization of modern medicine
and medical practices has globalised high life expectancy too. With advancement in medical
technology life expectancy is likely to increase. Result: You will have to fend for more number of
years post retirement.
Medical emergencies: With age come health problems. With health problems, come medical
expenditure which may make a huge dent in your income post retirement. Failure here could lead you
to liquidate (sell) your assets in order to meet such expenses. Remember medical insurance do not
always suffice.
Changing Social Structure: The culture of joint family is changing. Today, an increasing number of
young Indians are staying away from their families due to employment. Hence people have to
develop a corpus to last them through their retirement without any help from family.
Absence of Government sponsored pension plan: Unlike the US and UK where they have Roth IRA
and state pension respectively as social security benefit during retirement, the government of India
does not provide such benefits. Only 4% of India working population- mostly government employees -
are covered by pensions. The remaining 96% comprises self-employed and salaried professionals
who do not have a formal, mandated provision for pensions.
Job hopping: With youngsters hopping jobs regularly they are unable to get any substantial benefit of

plans like super annuity and gratuity. As both these plans require certain number of working years
spent in the service of a particular employer.
There's no easier way to begin retirement planning than by saving through a workplace retirement
accounts like Employee Provident Fund and Family Pension Fund and diversify it, on your own, by
taking adequate insurance cover and investing in a mix of asset classes.

Start now, Save more, Retire rich.

Shweta is Co-Founder of Personal Finance Blog that provides expert advice on Money Management,
Financial Planning, Investment, Insurance, Loans and Personal Wealth Management to effectively
manage your personal money.

State Pension