Why Retirement Planning Needs A Meticulous Game Plan

Retirement is that one word which most of us only begin to ponder over, once we have crossed well into our thirties or forties. Not planning your retirement properly could lead to stress and anxiety over how one would sustain themselves once the steady paycheck ceases to come. In later years of working life, this task of planning for retirement may in fact seem Herculean.

Meet Mrs Jayshree Tripathi, who has lived in diverse cultures for over thirty years. Her late husband was a career diplomat in the Indian Foreign Service. She reveals how due to lack of multiple incomes they kept postponing to financially plan for their retirement. “There was really not much talk of investments and retirement amongst young diplomats. We were unable to 'save' for a considerable number of years, due to family commitments. In retrospect, I realise I had left all the planning for retirement to my husband! But then we lived on a single income. He gave me most of his salary, with the exception of mandatory deductions. I did try to save a little from that, but it was usually spent on unexpected guests or a few extras for the children."

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Jayshree adds it was only when her late husband and she were in their early 50s that they really started to save. "We could save a little more and invest for put retirement. By the time the elder two children had left for further studies and then began working, we still had the youngest with us. After he went to university, we decided to put away more into our retirement fund. In the end, after his 36 years of service and retirement at the age of 60, in May 2015, this has turned out to be a blessing.”

Experts say planning for retirement must happen early. Financial Advisor Ratnasri Karra says, “Physiologically, the body does slow down as you grow older. So it is important to keep thinking about what you want and rethink the priorities of your life as your age advances. When you know that you have a secure income, a roof over your head and you don’t have to worry about tomorrow, you will do the things that you want to do." Ratnasri also talks of changing priorities as one grows. "Also as you grow older, your expenses on your health could really grow. Many a time your health insurance product may not cover the kind of expenses which may come up. It is good to have a plan keeping such unforeseen expenditures in mind.”

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Women always put themselves on the back burner, adds Ratnasri. "For everything, not just retirement planning. And that needs to change." Meet Tanushree Podder, an army wife who quit corporate life to pen books. She highlights an important issues. That many times women end up outliving their spouse and thus financial planning for the retirement years is a wise decision. “With life expectancy steadily climbing, and the work-life being limited up to a certain age, retirement planning becomes an important part of life,” says the bestselling author.

It is important to keep thinking about what you want and rethink the priorities of your life as your age advances. To have a secure financial situation at that age helps you get to that point in life - Ratnasri Karra

However, retirement planning isn’t just about medical bills and survival. It is also about enjoying your life, something which most of us tend to put off till retirement due to work and family responsibilities. Money shouldn’t be a constraint when you finally have time to do what your heart desires. Says Podder, “If one wants to continue enjoying the lifestyle that working life allowed, one has to make provisions for it. It is also important to retain one’s financial independence in order to live a dignified life. Today, the number of sunset years is higher than the working life."

She adds, "For a woman it becomes imperative to have a retirement plan in place because she has strong chances of outliving the spouse. Also, a constant flow of money adds to the sense of security. Besides, a good retirement plan allows her to fulfill the plans that have been carefully stored in the bucket list.”

So when is the right time to start retirement planning?

“As soon as you start earning!” says Ratnasri Karra. “My aunt used to tell me that whenever you earn, always spend some, save some and invest some. So if you follow that balance right from when you start earning, you’ll always be happy and secure at every stage in your life.”

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One often also observes that there is a difference in the way women and men approach retirement planning. Podder opines that the basic difference between the two is that women are more conservative than men, when it comes to financial planning. “The risk taking appetite has generally been found to be lower in women. For instance, I don’t like to take risks while my spouse has no issues with putting some of his money in high risk but high dividend products."

If one wants to continue enjoying the lifestyle that working life allowed, one has to make provisions for it. It is also important to retain one’s financial independence in order to live a dignified life. - Tanushree Podder

Many women are clueless about financial planning and investment opportunities. Some don’t take it seriously and some depend on the spouse to do the planning. Even the most educated and independent women often lack the will power and education required for the matter. "What most don’t realise is that the value of money is constantly eroding, so if you have 1 lakh saving today, it will amount to just about 13,000 after 30 years. That is if the inflation is contained at 7%. There are other factors that determine retirement planning. A woman may take breaks in career for having a baby, or take a sabbatical for doing the things she wants to do. In such cases, it is doubly important to have a decent nest egg. Most young people feel it’s too early to start planning for the sunset years. The truth is that it’s never too late to start planning.”

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Mrs Tripathi also agrees that men think about savings and investments differently from women and this has a lot to do with being the primary breadwinners for their families. Sharing her personal experience as a diplomat’s wife who lived as an expat for three decades, she says, “Diplomatic wives participated in a lot of voluntary activities for charities. We had to not only look after our families but also local and foreign dignitaries who visited us. Most of the spouses at our missions did not work. Those who could, managed to save. Only a few jobs, like teaching, were available and were permissible. Times and rules have changed favourably in the past decade." Nowadays, there are many dual-income families in foreign service. Young women are investing wisely for their own futures and for their children.

TAKEAWAYS

• A lot of people stall planning for their retirement to the later decades of their working life.
• Proper retirement planning doesn’t just ensure that expenditures are met, it allows you to enjoy the lifestyle you have become accustomed to while working.
• The best time to start planning for retirement? As soon as you start earning.
• Before investing, ask yourselves what kind of returns do you expect from your retirement plans.

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"I would suggest that women who are earning well in their 30s to invest wisely. Plan for medical emergencies, as life throws up many lemons, which are difficult to handle and entail unexpected expenditures. This tends to be very stressful as you grow older.”

So how does one go about retirement planning?

Podder shares her time tested strategy of not putting all the eggs in one basket. “A gamut of investments is what works for me. My investments are a mix of traditional and new tools. I have invested a reasonable amount in the last few decades of my working life. Most of my money is parked in low risk investments, which may not pay over- the- top dividends, but allow me to have a good night’s sleep.”

I would suggest that women who are earning well in their 30s to invest wisely. Plan for medical emergencies, as life throws up many lemons, which are difficult to handle and entail unexpected expenditures. - Mrs Jayshree Tripathi

Karra advises, “Saving is the first level. Whenever you start earning always put some money aside for that rainy day. Once you start tucking it aside make sure it is growing by investing it properly. Sometimes people start planning early, around 24-25 years of age, I know because I have met youngsters who are that disciplined. But then there are those who possibly miss out on that bandwidth and they start out a little older, when they have a family. But I would say this, no time is a bad to start. It is important for you future because I have seen people close to retirement still trying to figure out where is the money going to come from and some have to go back to work at that stage because they have not much money left. So no time is bad to think about it.”

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We couldn’t let go of Karra before asking her just what is it that one must keep in mind before beginning to plan their retirement fund? To this, she replies, “One thing you must look at it is that it shouldn’t be something which is terribly risky, at least not if you start doing it at a later stage in life. Whatever product you have invested in should not be too risky because you may or may not have the capacity to earn at that point in time. So you don’t want to risk your hard earned savings at that point in time. And in terms of the kind of returns it gives, you need to evaluate what kind of lifestyle you want to live after retirement. So somewhere you need to go deeper into yourself to understand what is it that you want.”

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