The Hindu Business Line : Building up a big score

In a competitive world, you cannot afford to be caught on the wrong foot in this game called life. The hand-eye coordination is not at its best; your feet have started moving slower than your mind want them to and more often than not you are found plum before the three stumps.

This is the time to call it a day but you drag on because you did not prepare yourself for this end to the dream. So what’s the option?

There are four ways of funding retirement — ask your children, your employer, government or take care of your needs yourself.

The current generation has seen traditional joint family structures giving way to nuclear families, your children may not be able or willing to look after your needs; or you may not be keen to impose on them. Most of the current generation will retire with no annuities and the government in India is not in a position to provide social security to every old person.

So the option is, do it yourself. Build a sizeable nest egg to take care of your needs and enjoy the fruit when you cannot add to it any more.

But what’s the hurry? Isn’t this the expected response from young men and women of the day? Well yes, but if you are old enough to start working, you are old enough to start saving for the days when you won’t be working anymore. The best people to learn from are the sportsmen or the actors whose working life is much shorter than their retired years.

Life is like cricket

You might have heard elders talk about the value of money in their young age…how much one could have bought for the same ten rupees you don’t care about today. Tomorrow will be not different, when you will be old.

Think about how much you would pay for a loaf of bread after three decades. At just 5.5 per cent average inflation for 30 years you will pay Rs 50 for the same loaf of bread and your monthly household expenditure will swell from Rs 5,000 to Rs 25,000.

It will be erroneous on your part to assume that retirement will reduce the cost of living. Your medical needs will multiply exponentially and inflation will result in increased day-to-day living expenses, pinching your pocket.

But, that said, retirement is a milestone in a person’s journey through life when you can indulge yourself and are free to do what your heart desires, be it travel or trekking, sailing or studying. So what should be the action plan?

Start taking singles early

It’s never too early to start saving for retirement. Even if it means small savings. Every single run contributes to the scoreboard. The time to save and invest for retirement is when you are still working, with time on your side and risk in your appetite. To ensure that retirement planning is not a race against time, build a good run rate early to guard against the middle overs when your other responsibilities may take precedence.

Offer straight bat

Assess and strike the right match between your current needs and future expectations. Get a handle on your present income, expenses and resultant savings. You need to create a substantial corpus to see you through post work life.

Keep an eye on the average

Use a retirement calculator to work out the final tally. Save to maintain your current lifestyle considering inflation and accordingly factor in a buffer for contingency. Now you can calculate your monthly and yearly run rate to reach the target. There is no better success mantra but good planning that will help the current run rate meet the required one.

Consult the coach

As a professional you are proud of your expertise in your chosen area. Just as others seek your advice in your field of specialisation, so should you. Consult an advisor to help you build a financial plan for various life stage needs, including retirement.

Enjoy the slog overs

Early planning gives you the liberty to enjoy the slog overs. You can contribute more towards your retirement corpus now after meeting other obligations of life.

It’s a comma, not a full stop

So there is never a better time than today to start planning for future. When you are planning for the long-term macro-economic conditions, market volatility, interest rates and other economic parameters should not be the guiding light. It is the time in market and compounding that will help you live the life you deserve even post active working years. When you hang up your boots, just get a new pair. Think of retirement as a liberating experience that allows you the time, space and means to do what you want to do. Remember Retirement is like the slog overs, the best part of innings and meant to be enjoyed.

(The author is Senior Director & Chief Marketing Officer, Max New York Life Insurance.)

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