Few thoughts on Retirement life and the importance of retirement planning

What does the term Retirement mean?

The term retirement in literally sense “the action or fact of leaving one’s job and ceasing to work”. Honestly speaking majority is not prepared for this phase of life.  For many it poses serious questions on the life ahead as it comes as a matter of compulsion not as a matter of choice.

What should the term retirement ideally mean?

Retirement doesn’t mean stoppage of work; it means freedom from compulsion to work for money – Financial freedom.  Retirement will be lot more easier when it comes as a matter of choice rather than a compulsion. 

What could be our hardships during the Retired Life?

  1. Economic Aspects
    1. Inadequate Income
    1. In India 40% of the elderly (above+60) are working
    1. Retire without any financial security like pension and other post retirement benefits
  2. Social Aspects
    1. Greater alienation and isolation
    1. Relegated to an insignificant place in society
    1. Loss of status and decision making power
  3. Health Aspects
    1. Illness are chronic and Multiple in nature
  4. Psychological Aspects Mental Health
    1. Depression
    1. The worries usually about
      1. Inadequate Economic Support
      1. Poor Health
      1. Inadequate Living space
      1. Loss of respect
      1. Unfinished family tasks
      1. Lack of recreational facilities- Passing time
      1. The problems of spending time
      1. Feeling of Neglect
      1. Widowhood
  5. Health Care Aspects
    1. Most of the ailments not medically treated- Most common reason for not seeking care
      1. Financial Problems
      1. Perception that ailment was not serious hence the treatment is delayed
  6. Safety Aspects
    1. Elderly abuse-Mental & Physical
      1. Dependent position of the older
      1. Perceived powerlessness
      1. Social isolation
    1. Crime against elderly
      1. 25% by family members
      1. 60% committed during day

Towards the end of life, many older people will face health problems and challenges to their ability to remain independent. We need to address these too, and do it in a way that is affordable and sustainable for families and society. But as a society in India, we are less resourceful to take care of all of its elderly and we don’t have an all round social security mechanisms to take care of its elderly.  

Not all problems listed above could be handled at individual level. But sound economic basis would help us to manage these hardships well. Hence the need to focus on building sufficient corpus for retirement.

Why Retirement Planning to be considered as an essential need?

  1. Protection of Post-Retirement Lifestyle- No one wishes to compromise on the living standard after retirement. Retirement Planning aims at securing one’s life after retirement by arranging funds for your post retirements needs and maintaining ones living standard.
  2. Breakdown of traditional support systems-  Our joint family concept has been a well suited mechanism that provided a holistic cushion for those of the aged in the family. Now the complexity of modern life has brought with it even more complexity for the retired.
  3. Protection for Spouse/Dependents
  4. Increasing life expectancy – It is the biggest component of Financial Planning as one’s working period (Accumulation Phase) & Retirement period (Distribution Phase) are almost equal.
  5. Falling Interest Rate Scenario
  6. Increasing Cost of Healthcare
  7. Impact of Inflation
  8. Inadequate public spending

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