CHENNAI: The way we work has changed much over the past century, across the globe. From varying degrees of success in establishing a suitable minimum wage to implementing decent work hours (at least in a number of sectors), from working on labour rights (a work in progress) to building support systems for the workers, we’ve come a long way in making employment work for the employee. While there is still much left to be desired, it’s allowed people to pick a job they like, do it for as long as they are capable (or willing) and then retire to a life of relative comfort. Well, that’s only when all is well. At a time of crisis, when job security is out the window, retirement plans find no place on the board. If the COVID-19 crisis has assured anything, it’s that we are far from hanging up the boots.
The reality of it hit Apoorva Mohan only when a friend asked her if she ever had a retirement plan in place. The friend, who had posed the question, jokingly remarked that she planned to die before it was her time to retire. Apoorva, on the other hand, is busy working out ways to augment her income; she can’t afford to think of not working just yet.
Plans on hold
While the response may seem typical for a 20-something, it rings true for people across the spectrum. Indira* is a sought-after teacher for children with special needs. For the love of the job, she has managed to keep at it for over four decades. Having turned 69 this year, she had planned on “taking it easy” this year and eventually easing into retirement. That was before the pandemic hit. With all schools shut, work has not been the same. With the start of the plan taking a hit, she can’t afford to retire at this point, explains her daughter Rani*.
This problem isn’t unique to Indira or people of her age group. The number of people who lost their jobs to the pandemic in April was estimated at 12.2 crores. As of early September, the Central government does not have data on the exact number of jobs lost. While such job loss has wreaked havoc on the financial stability of millions of families in the country, the virus itself has done its own damage. Over 88,000 deaths have been reported in the country since March. For many families, this meant losing the sole/primary bread winner. So it was for Prema* too when her husband succumbed to the virus in late July. While the combined income of the couple had helped sustain their family of three quite comfortably, things won’t be the same anymore. Especially when you factor in the enormous medical expenses that came with her husband’s long hospitalisation for the infection.
For the future
Such uncertainty, while devastating in its own right, has people worried about the future it would write. On the other hand, it also has them (at least the ones who can afford to) planning for life after work. For Sathish Kumar, it was anxiety about the precarious job market that had him aggressively investing for his future. “My domain could get crushed in the changes to come in the job market. Anything is possible. So, the sooner I retire, the better. To do so, I would need liquid funds when I am older. Investing is the wise option here. The earlier, the better too. I am investing 50 to 60 per cent of my income. I’m trying to push it to 70 per cent,” he begins.
Sathish’s investment plan has three major heads — quick-term, short-term and long-term. A wide assortment of stocks, indexes, insurance, fixed deposits, bonds and mutual funds make up his investment portfolio. While he is yet to begin focusing on the long-term options, it would involve government schemes like the NPS (National Pension System) and real estate plans, he says.
As much as saving one’s income seems wise, it is not enough, he suggests. “Saving is different from investing. Saving money is accumulating a part of the income over a period of time but investing is letting your savings make money and that money to make more money. It is an indefinite approach. So my plan is to be aggressive with my investments but, at the same time, not miss out on the present by sacrificing too much in the process,” he shares.
People on the younger side of 40 seem to share Sathish’s desire to retire early. Retiring to a quiet life, away from the cutthroat demands of the city and its aggressive consumerism, with some level of self-sustainability has its charm. Vignesh Chandran, an entrepreneur, has a plan along these lines. The pandemic has only reinforced the idea. “Before the pandemic, the idea was just to set up a passive income that would pay for life and allow me to settle anywhere. That would mean I would have to work hard for the active income for the next 10 to 15 years and then retire. Now I realise that a single passive income would not suffice; I would need at least two. One of them would definitely be farming,” he narrates.
Despite having worked in several sectors from sales to customer care, Vignesh has always held farming as the ideal. The activity and the lifestyle it offers, therefore, naturally made it into his retirement plan. But, he has much left to do to make it happen. “Saving wouldn’t be the only way out. I have to increase my income and invest in as many ways as possible. As of now, I have four sources of income in diversified fields. Down the line, in one or two years, I will choose the two best paying sources and continue with that,” he explains. His wife would follow a similar plan too, augmenting their retirement corpus sufficiently for two. Saraswathi*, who is five years away from retirement, places her trust on the stock market to prepare for it. She has a healthy life insurance plan, a couple of real estate investments and some mutual funds to attend to the needs she and her husband may have in their final years. Despite these options, the virus scare has her being extra cautious, knowing that all it takes is one major medical emergency to destroy their retirement plan.
Sound advice
Even as people, young and old, find ways to prepare for what’s to come, financial planners too suggest that the best way out is to invest and do it wisely. “Even the younger generation now has enough awareness about investments and planning for one’s retirement. They begin as early as 25 years. At this rate, they are good to retire at 40-45 years. For people looking for investments, the National Pension System is a good place to start. Share market and the mutual funds are also viable options. Yet, these do not offer assured returns; only fixed deposits at the bank and post office give you that. The returns for any other scheme changes on the interest rate and several other factors. Hence, it is wise to split your money into various forms of investments. Ideally, setting aside at least 25 per cent of monthly earnings in the form of savings or investments could help one retire comfortably in their mid 40s,” advises S Ramesh, financial advisor.
What could be tricky, however, is real estate investment, he says. He suggests that you do it under one condition — that you invest at least 50 per cent of the cost yourself, without relying on loans. Otherwise, the returns would not be worth the effort, given that the interest on the loan you end up paying would keep you drained for a long period of time. It all comes down to “level-headed, disciplined investment” to secure your future, he adds. “When one earns `10,000, they have the same commitments. When the salary increases to `20,000, they seem to have the same shortfalls. The need is to be disciplined about the investments,” he concludes.
*Names changed