Expert Zone
Straight from the Specialists
Lack of retirement planning options
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Unlike people in developed nations such as the U.S. and Europe, people in India are known for their conservative habit of saving. The need for regular income after retirement is a concern that haunts most Indians.
It goes without saying that banks and financial institutions should be designing products to tap this huge market. And yet the real situation is quite the opposite; there is a shortage of pension plans in India and those wanting to generate a retirement corpus have to depend on LIC.
We are also seeing young India investing heavily in home purchases. While this is very good from the asset build-up perspective, it should not come at the cost of the large corpus needed to provide liquidity on retirement.
The Annuity Game The steps needed for this are quite simple. Keep adding small amounts every month/year throughout the working period and build a corpus large enough to purchase an annuity on retirement. This would be the most structured way of handling it and is more advisable than ad hoc lumpsum accumulation which may or may not fructify.
So then, what are the structured options available to the customer:
EPF – It is the best, safest and forced form of accumulation. The emphasis on “forced” is what makes this a very good bet. The flipside being that a large number of self-employed and semi-organised sectors do not have access to this route.
Road to stress-free retirement years
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Retirement is not the end of the road; it is the beginning of yet another fabulous journey. After all the gruelling years of hard work, a calm and stress-free retirement is the best reward one can get. So how do we ensure we spend our sunset years without worrying about any liquidity crunch? Here is an overview to help you live life on your own terms after retirement.
Understanding retirement needs
Every stage of life has varied financial needs. Retirement needs are also different and you are most likely to spend on:
- Basic day-to-day expenses
- Medical and other emergencies
- Holiday abroad or in India
How to age gracefully
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The title of this article may appear an oxymoron to a first-time reader. How can old age be associated with grace? No one likes to grow old and eventually die, despite this being an irreversible universal truth.
The topic becomes quite sensitive, can even lead to violence if posed directly to an elderly person — we will need to wait for Amitabh Bachchan’s response to the same in “Bbuddah Hoga Terra Baap“.
Retirement from the productive stage of life is also a similarly inevitable process. Society — developed ones more so than developing — doesn’t look too kindly on this population. The perception of such people is usually negative. Call them a spent work force or a burden to the family or a drag on government healthcare funding — it isn’t a happy situation to be in.
“If I’d known I was going to live this long, I’d have taken better care of myself.”
Here are some rules which can help you age gracefully:
Rule 1: Understand and manage longevity risk better
