Tricky Time Zone! Retired, but not Hurt
Post-60 years of age is an extremely tricky time zone that many a salaried and self-employed investor who meets and exceeds the Indian life expectancy will have to tackle. Those who plan for it early are the ones who are less likely to realize the sinister intent of the old Chinese curse of ‘May you Outlive your Money’.
I remember receiving the bio-data of a 65-year-old gentleman in response to a part-time job vacancy my company had advertised for, several years ago. His bio-data was an impressive one and he had held a fairly responsible position with a MNC at the time of his retirement.
At the time of his retirement, he felt he was adequately well-equipped to fend for his wife and himself, having invested a fair amount of his savings in Fixed Deposits and Insurance, which was typical of an Indian investor, back then.
He had retired quite happy, having held a prominent post, holidayed round the world with his wife and having facilitated an overseas posting for his son.
Within a couple of years post his retirement, he began feeling the pinch of ‘Real’ Inflation. The cost of his purchases were escalating at a far more rapid rate than his return on investments. Interest rate cuts had slashed his Fixed Deposit returns and the periodic inflows from his endowment insurance policies which had seemed quite adequate at the time he signed up, now seemed woefully inadequate.
Having realized that his retirement corpus had been breached, he decided to start working again to meet his expenses, instead of extending a hand out to his son for help to mend the breach .
This is by no means an isolated incident and now, more than ever, with interest rates net of the inflation rate not offering too much leeway and most retirement realizations brought into the tax net, I fear that there must be a huge number of individuals in India who must be going through the same experience. It is worth noting that over the last six decades, the life expectancy of Indians has risen to around to 69 years from just 41years, as per World Bank data tabled in 2017.
Unless this trend reverses, chances are present-day Indians may have an even longer life expectancy.The insurance industry in India was off the blocks with their pension plans and the mutual fund industry in India too discerned this trend and there is now, no dearth of retirement fund schemes on offer from various Asset Management Companies (AMCs) . Besides these, there is of course the government -backed National Pension Scheme (NPS).
Which one of these one should choose or what is the right mix is a question best left to experts. Whatever one does during one’s earning lifetime, do not neglect planning and providing for adequate liquidity and periodic inflows post retirement to dodge the Chinese curse. That will ensure, one may have Retired, but
not Hurt.
Ashok Kumar
Head of LKW-India.
He can be reached at ceolotus@hotmail.com
(Views expressed here are personal)