Retirement planning should be our top priority
As India is marching towards the developed country status, we are now enjoying most of the facilities available in the western developed world. But have you ever thought of the cost we are paying for it? Yes the cost of living is increasing at astronomical proportion with life style inflation.
What is life style inflation?
In simple words, it is the increase in cost of living due to our affection towards life style expenses. 20 years back, we were not having mobile phones, now all family members are having one. We prefer air conditioned vehicle for our travel and prefer the costly multiplex for the week end movie. Eating out and the vacation take away a chunk of our monthly budget. All these are contributing to life style inflation.
Why retirement planning is important?
Having lived in a particular standard during our active life, we cannot reduce our standard of living after retirement. More over nobody prefers to depend on their children after retirement. Joint family system is disappearing in our country. Migration to other countries is common and it is most likely that we will have our children settling down in some other countries. All these demands we plan for our retired life. The major reason why we should plan for retirement are:
1. Longevity is increasing: Yes, we will be forced to live more with modern medicine and the easy availability of better treatment options in India. Retired life can be as long as the working life for many of us. If you don’t have enough savings, you may outlive your savings.
2. Cost of health care: The health care inflation is very high compared to the general inflation rate. It will be difficult to afford treatment without a health insurance in future. There is no standardization of cost in most of the hospital procedures.
3. Health Insurance penetration is low: We pay for most of the treatment from our pocket in the absence of a comprehensive health insurance cover. Even if you have a health policy, there are many exclusions in that where you will not be paid by the insurance company. Routine doctor visits are also becoming costly.
4. Standard of living after retirement: In olden days, retired life was almost confined to the house. But now we don’t prefer to reduce our standard of living after retirement. We want to enjoy life even after retirement. We prefer to use the better smart phones and the high priced cars even after retirement. This demand huge savings for retired life.
5. Effect of globalization: We prefer overseas education to our children. They prefer to settle down there after the studies. We are not getting their attention during the old age and we cannot expect them to support us financially. We may have to spend more for visiting our grand children abroad!
6. No more joint family system: We are almost out of that good old system where the old parents were taken care by their children. So, the only option for all of us is to save enough for that long retired life.
Don’t be scared.
There is no need to be panic. You can plan your retirement in a big way with enough money to take care of your golden days. We will discuss this issue in the next article.
Melvin Joseph
SEBI registered Investment Adviser
SEBI registration number -INA 000000342
Finvin Financial Planners
10. Ground Floor, Olive Excel CHS Ltd
Plot No- 16, Sector 42, Nerul, Navi Mumbai – 400 706
Mobile: 91 9820843739
Website : http://www.finvin.in
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