Retirement landscape has changed radically over the last several years, There was a time, when maximum workforce was into government sector & one could count on a pension. Those days, retirement planning meant figuring out how to use your free time, not calculating rates of return and thinking new ways to invest.
Nowadays retirement planning must span the entirety of your adult life. It is not just something you figure out while cleaning out your desk the day you turn in your keys and say goodbye to work life.
Indians are warming up to the idea of retirement planning in the past decade or so. To live a smooth life after retirement, one needs to carefully strategize their retirement planning. Longer life expectancy is already on steep rise. Today, an Indian individual aged 65 years and living in a metro, has a 50% chance of surviving till age 85 and 25% chance till age 92. Better healthcare and medical help is a prime reason why our generation will live longer.
Further, we are fast moving towards a pension-less society. If you are not in government services, you seriously need to worry about income during retirement.
The joint families are now getting broken into Nuclear family setups. Today, more families are choosing the nuclear way of living and this also reflects in the post retirement living patterns of most individuals. A smaller family size entails more overheads per member of the family.

Ambitious goals for kids education is also hurting the retirement kitty of majority of investors. It is almost becoming a norm to send kids overseas for higher education. In year 2017, more than 400,000 Indian students went abroad for higher studies. Although this is nowhere near China, but there is no doubt that Indian parents will catchup in the years to come. According to a study, conducted by HSBC, 71% of middle and upper middle class parents admitted that they are willing to acquire debt for their child’s better education. For them, Child Education goal comes before their own financial security during retirement.
Most people approaching retirement or in retirement know that they must balance their retirement income with their retirement expenses. The tricky part that is often not addressed is guaranteeing the retirement income and safeguarding against unforeseen circumstances.
There are some incredibly serious issues in play when it comes to a securing your retirement life. Retirement is not as simple as working, saving and then living off of those savings. For people either preparing for retirement or already retired, there are a number of factors that need to be considered.

For example:

  • Do you know how long you or your spouse will live?
  • Are you sure the economy will behave as you think?
  • Have you factored inflation and swings in financial markets into your retirement plan?
  • Will government schemes like PPF, EPF, MIS, Pension Scheme remain as they are today?
  • Are you sure you will not have to spare a big amount from your Retirement kitty towards financing your kids Marriage, Education or Business.
  • Are you sure your Mediclaim policy will cover every illnesses you develop and will last for repeated hospitalization and other medical expenses?

Well there are many financial choices designed for retirement Planning, here is a list of some of the most common retirement investment tools available.

NPS: NPS is a retirement-focused investment scheme. It does not give an option to deploy the entire corpus in any other investment avenue as per choice. A retiree may want to deploy the amount across investment avenues such as SCSS, post office monthly income scheme, mutual funds, bank fixed deposits, etc., and across maturities for better liquidity. By opening an NPS account, this flexibility is lost.

Bank Fixed depositThis is an investment option for an investor who is looking at fixed and assured regular income. Also, the returns from FDs are guaranteed and the FD itself can be used as collateral for loans. FDs should be looked at more as a savings product than an investment product. Net of tax, the real return from fixed deposits tends to be lower than inflation at most times. Hence, calling it a savings product is perhaps more appropriate.

GoldMany proponents of gold suggest it is a good hedge against rising prices. It’s not entirely correct statement. Gold is better hedge against crisis rather than against inflation. As retirement solution, gold is more like an insurance than a sure-shot investment. Gold is likely to head higher for the most pedestrian of reason: Supply and Demand. It is not wise to take a pedestrian approach when it comes to retirement portfolio.

Mutual Funds: The main advantage of mutual funds is that you don’t have to buy an annuity, as is the case with the NPS or pension plans from insurance companies. Instead, you can opt for a systematic withdrawal plan to meet your regular cash flow needs. Since a part of the withdrawal is your principal, it will be more tax-efficient as well.


By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

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