Don't retire without enough money for 30 years and more: Here's why
My 92-year old friend Jo would say: “Don’t retire at 60. If you lived to 90, you will regret those wasted years when poverty and emptiness hits as you age. If you passed away early, nothing is lost. But what if you lived really long?” So here are a few points to keep in mind.
retirement —without depending on anyone. There are people who get carried away by a lump sum PF payout. They spend lavishly on travels and outings. Then as they age, they live miserably. Ensure that your math is not horribly wrong.
There are several online financial calculators to help you verify if you have adequate funds for retirement. Check them out. A simple rule of thumb is to have 20 times your current annual spend as your corpus. Include everything from the maintenance of your own house, to all bills and expenses. Entertainment expense today could become medical expenses later. If you spend Rs 6 lakh a year now, you need a corpus of at least Rs 1.2 crore to retire.
Don’t make the mistake of adding the house you plan to bequeath to your child to arrive at that Rs 1.2 crore. Include only assets you plan to use in your lifetime. If you fall short, you have to find an income after retirement, so that you can save and invest what you have and also add to your corpus.
Second, if you are professionally qualified to practice for a fee—doctors, lawyers, chartered accountants for example—you could earn for as long as you choose to. It is the others who have to find a second career, and they need to identify what value they will offer.
Begin your planning early, in your 50s. Decide what you want to do, and invest time, effort and resources to meet people, get involved, build networks and equip yourself. Your bargaining position will be weak if you begin after you have retired.
Not everyone is keen to hire a 60-year-old for jobs that 30-year olds can do better. If there are specific skills and knowledge that you have, make sure you search widely to find out who may need it and also value it.
Third, get a grip on the additional demands a new career will make on you. If you plan to teach what you learned on your job, be sure you have honed your reading, writing and talking skills, too. If you plan to offer consulting services, prepare for long hours and travel. If you choose sales,advisory, or promotional jobs. you may be on the road much more than you may want to. If you choose operations, services or support, you may need skills with technological tools.
Do not underestimate the speed at which things change and enhance the obsolescence risk for a senior citizen seeking a job. When your physical and mental faculties are not at their peak capabilities, you need to find other skills that can be valued.
Fourth, think like an entrepreneur who can solve problems for which others do not have the time, knowledge or expertise. A retired English teacher is raking it in by teaching young GRE aspirants; she spends hours honing her skills to meet that demand. A retired bank officer who loves math is working for an online tutoring firm, creating innovative problems and short cuts to solve them; Geetha Mami is making ad revenues on YouTube, regaling her 100,000 plus subscribers with stories from her agraharam. She donates the proceeds to charity.
Being clear about what you can do and finding ways to do it profitably, takes time and effort. Think about what others might direly need and whether you can offer it.
Fifth, be wary of traps and tricks of unscrupulous operators who wait for retired folks who have age, stature and credibility. They encash these qualities to further their goals by appointing senior citizens as selling agents, solicitors for clients, administrators of dubious enterprises, and managers of questionable operations. Many fly by night fixed deposit mobilisers have left elderly branch managers to face violent depositors.
Do not take up a job because someone makes an attractive offer. Ensure it is ethical and legal, and plays to your strengths.
Sixth, do not slack on executing your plans. There are many who hold forth on dreams of counselling young graduates from rural areas; or teach English and Math at village schools; or empower women to become better money managers; or help farmers to get better prices. Very noble ideas, except that they have remained mere ideas.
If you want to do something useful for society and do not care much for money, join hands with the many NGOs run by enthusiastic youngsters. There is a lot happening across the country and they all need hands and legs to do the many tasks. Get started.
Seventh, value your time so that you can monetize it for yourself. Time spent on social media is mere entertainment. So are the hours spent watching every inane debate and serial on television. These activities do not count as networking, investment or expertise building. You need focused interactions that matter to your second career.
Avoid the temptation of becoming an armchair expert. That position does not pay, yet. People are willing to pay a yoga teacher who helps foster better health; a caregiver who can take care of the elderly; an accountant who can balance books, interpret and comply with laws; or a coach who can coach, observe, improvise, motivate and enable.
Unless you are in that lucky place where you have enough and do not need the money, do not retire from earning a positive income too early. Relaxing at 55 should not lead to penury at 75. Protect yourself.
(The Writer is Chairperson, Centre for Investment Education and Learning)