Are you really prepared for your retirement?

Are you really prepared for your retirement?

Many Indians underestimate the needs post retirements. And too worsen the scenario, many do not start their retirement planning early.

In a surprise announcement, all Indian cricket fans heard the news of Virendra Sehwag announcing his retirement from international cricket and also from the IPL. Coincidentally, it was his thirty seventh birthday on the same day as the retirement announcement.

In a television interview that same day, one could sense the depth of thought and preparation that may have gone through Sehwag’s mind before deciding on retirement.

This announcement was preceded by another well known Indian cricketer Zak (Zaheer Khan) who had also announced retirement from cricket last week.

This led me to think of what apprehensions (if any) a successful international level cricketer such as Virendra Sehwag or Zaheer Khan could have had while deciding on their retirement at this age of thirty seven. Incidentally both are aged thirty seven and have birthdays in the month of October.

How prepared was Virendra Sehwag for retirement? Or for that matter are Indian investors ready or apprehensive about retirement. And, if they are not ready, what could be the possible reasons.

On reading a recent global report by HSBC called “The Future of retirement” I found interesting insights in its findings about how Indians score as regards retirement preparedness. Some of the findings for India were:

Globally, a third (34%) working age people are not confident they will be able to support a comfortable retirement, Surprisingly, only 8% working age Indians said they fear financial hardship in retirement.

Maybe this stems from the finding that one in seven (14%) working age people in India expect they will never be able to fully retire. This view is particularly peculiar to India, as Indians believe they want to keep alert and active by working and financial considerations are not the only reasons.

Some reasons for ill preparedness for retirement and lessons that one can draw from the findings include:

Did not start saving early enough - With the benefit of hindsight, many retirees (36% globally) regret that they should have started early. In India that number is 47%. In fact, 37% retirees in India regret not having a financial plan for retirement whilst this need is not well recognized in the working age people.

Were paying off a mortgage or debt – Paying off debt has emerged as a great barrier globally, to funding retirement goals. Be aware of the debt you take on in your working years.

Could not afford saving for retirement - The majority (85%) of working age people around the world say that saving for retirement is not their main savings priority. In India 26% say that saving for children’s education is their main priority. Other more immediate life events and unexpected expenses also impact retirement savings, hence make a plan to start saving regularly, however small.

Were not aware how much they needed for retirement – Many working age people globally are not saving for retirement. In India this number is 26%. In fact you may not realize this until you are actually retired, which may be too late. Have some numbers in mind, based on your current lifestyle and inflation.

Did not plan for generating retirement income - Interestingly the report also says that unlike retirees, pre retirees are thinking of generating retirement income in newer ways such as domestic second property, jewellery, antiques, paintings, art, classic cars and fine wines. Whilst a second property may well be an option, generating income from many of the other options may be quite a challenge in our opinion. Did not plan for post retirement - As we can learn from the Virender Sehwag example, Sehwag has already charted a purpose for himself by thinking about what he will be doing next, which he mentions in his communication relating to the Sehwag International School at Jhajjar, and continuing to be associated with cricket coaching and commentary. Unfortunately, a large number of retirees struggle with what they should be doing in their spare time.



Whilst the triple century man has called it a day, you need to be better prepared for your second innings - your retirement.

By Shalini Dhawan

Happy investing

Source;moneycontrol.com