Retirement obviously is one important event that each of us look forward to. It is a time of not only reckoning but harvesting. The objective or aim of retirement planning is to check and balance the income and expenditure during the post-retirement period of dependency. Until very recently, most of the aged people stayed with their families after retirement with or without any pension or any plan for self-sustenance.
However, as discussed in our related articles, Retirement Planning – Starts now not sooner or never, let us save more. Retire rich, if not very rich. With changing economic status of Indian society, now things have already started to look very different and even financially difficult. Certainly, without a proper retirement benefit plan, you will no longer be able to sustain yourself after retirement!
The recent population situation in India today is more or less in line with the global current trends. The life expectancy, as on 2007, for males at birth is 67 years and 71 years for females. This is a positive consequence of enormous advantages to the society contributed by economic and social changes, technology transformation and the continuing innovations in the field of medicine.
With further advancement in medical technology life expectancy is most probably likely to increase. It is projected that the life expectancy would reach 73 years in the year 2025. By the year 2016, the Indian population is expected to grow by 49% over the figures as per 1991 census. But during the span of the same 25 years, the growth in the population of senior citizens (i.e. people above 65 years of age) would be more than double that of the population growth. This would where retirement will enter the scene.
The life expectancy of the Indian population, is expected to be around 80 in 2020. This then will eventually cause a big rise in the country’s dependency ratio. (The dependency ratio is the ratio of the number of people below 18 years and above 60 years of age to the number of people in the working age group of 18 to 60)
The joint family system which provides a sense of security to the old people is now getting disintegrated very fast and the lack of any organized social security system as well as the ever increasing cost of health care will have an a negative and adverse effect on the well-being of the ageing population.
Only one third of the Indian population is actually working population and that includes the self-employed. Out of these, only 11% have a regular scheme of retirement benefit. The remaining 89% of the working population have nothing at all to wait and get during their retirement.
It is this sad event, which is likely to remain without a proper economic security during their old age. Hence, the need of retirement planning for our country does not require any further emphasis.
In short, we need and must create continued income flow after retirement. In the given events and circumstances, it is imperative to think about the following issues affecting you personally and/or your family.
- Your status or current level of ’standard of living’ you would like to maintain after your retirement
- Your present capability to save (disposable income) to provide for a regular retirement income and simultaneously to create other income depositories.
- Your estimated life expectancy at the time or moment you reach retirement.
- The additional obligations and responsibilities that you have to shoulder on your retirement, depending upon your family circumstance and the dependents that you might have.
- Provision for unexpected emergencies, like hospitalization, accident etc.
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In Conclusion, Obviously to maintain a steady flow of income post retirement you need to create a dependency provisions and income depositories for yourself as well as your family by regular savings, careful planning and a balanced portfolio of investments. It is a known fact that any retirement benefit can be built over a period of time only by setting aside a certain proportion of the income earned during the working span. Compound interest and other related means could help you make a steady flow of income once you retire. Invest now or suffer later.
