Retirement obviously is one important event that each of us look forward to.  It is a time of not only reckoning but harvesting.  The objective or aim of retirement planning is to check and balance the income and expenditure during the post-retirement period of dependency. Until very recently, most of the aged people stayed with their families after retirement with or without any pension or any plan for self-sustenance.

However, as discussed in our related articles, Retirement Planning – Starts now not sooner or never, let us save more.   Retire rich, if not very rich.  With changing economic status of Indian society, now things have already started to look very different and even financially difficult.  Certainly, without a proper retirement benefit plan, you will no longer be able to sustain yourself after retirement!

The recent population situation in India today is more or less in line with the global current trends. The life expectancy, as on 2007, for males at birth is 67 years and 71 years for females. This is a positive consequence of enormous advantages to the society contributed by economic and social changes, technology transformation and the continuing innovations in the field of medicine.

With further advancement in medical technology life expectancy is most probably likely to increase. It is projected that the life expectancy would reach 73 years in the year 2025. By the year 2016, the Indian population is expected to grow by 49% over the figures as per 1991 census. But during the span of the same 25 years, the growth in the population of senior citizens (i.e. people above 65 years of age) would be more than double that of the population growth.  This would where retirement will enter the scene.

The life expectancy of the Indian population, is expected to be around 80 in 2020.  This then will eventually cause a big rise in the country’s dependency ratio. (The dependency ratio is the ratio of the number of people below 18 years and above 60 years of age to the number of people in the working age group of 18 to 60)

The joint family system which provides a sense of security to the old people is now getting disintegrated very fast and the lack of any organized social security system as well as the ever increasing cost of health care will have an a negative and adverse effect on the well-being of the ageing population.

Only one third of the Indian population is actually working population and that includes the self-employed. Out of these, only 11% have a regular scheme of retirement benefit. The remaining 89% of the working population have nothing at all to wait and get during their retirement.

It is this sad event, which is likely to remain without a proper economic security during their old age. Hence, the need of retirement planning for our country does not require any further emphasis.

In short, we need and must create continued income flow after retirement.  In the given events and circumstances, it is imperative to think about the following issues affecting you personally and/or your family.

• Your status or current  level of ’standard of living’ you would like to maintain after your retirement
• Your present capability to save (disposable income) to provide for a regular retirement income and simultaneously to create other income depositories.
• Your estimated life expectancy at the time or moment you reach retirement.
• The additional obligations and responsibilities that you have to shoulder on your retirement, depending upon your family circumstance and the dependents that you might have.
• Provision for unexpected emergencies, like hospitalization, accident etc.

Best Reading:

• Retirement planning
• Why you should invest early, Benefits

In Conclusion, Obviously to maintain a steady flow of income post retirement you need to create a dependency provisions and income depositories for yourself as well as your family by regular savings, careful planning and a balanced portfolio of investments. It is a known fact that any retirement benefit can be built over a period of time only by setting aside a certain proportion of the income earned during the working span.  Compound interest and other related means could help you make a steady flow of income once you retire.  Invest now or suffer later.

All of us, with the exception of none, will one day reach this stage which we call, retirement.  This is the time of reminiscing the good old days, the time to relax and enjoy the remaining years that we will stay here on earth together with our loved ones.  It should be the best times of our lives, the harvesting season of our journey with life.  Retirement of course need not be only about the usual gardening and reading and growing old. If planned well, it can be the most wonderful stage of your life, without children that need to be taken care of and loans that needs to be paid.

Here are some valuable pointers on how to plan your retirement:
To plan your retirement, you need:

• Time:  Start early. Use the power of compounding.  This can make even your small amount of money add up to a substantial one. Start putting and turning a small amount of your investments into a valuable and suitable pension option.
• Commitment: This needs total discipline. No matter what your expenses are, there should be a constant outflow towards all your goals until you retire. This is often easy said than done because your immediate needs may always seem stronger than a future requirement.
• Adjustment: Prices will definitely rise by the time you are about to retire and continue rising after your retirement. Account for possible inflation because it truly will affect you as long as live. Your standards of living might change for sure. In fact, it would have to constitute a major increase in your expenses patterns rather than inflation, over the last few years.
• Detailing: When accounting for the most basic things that you will be spending for your retirement, don’t forget to include all the other expenses currently being reimbursed now by your company. Medical or traveling expenses are the basic examples, these may not pinch you right now, but certainly they will at a later stage, since you will definitely bear them yourself post retirement.
• Selecting the right option: At this stage, keep your options open on investing in an annuity distribution cycle and service providers. Once pension options open up in your area, you immediately check a variety of more suitable options available.

Bear in mind the following:

• Lock-in: Your pension plan should definitely not have any flexibility or liquidity options. Avoid withdrawal or liquidity options by all means during the contribution (wealth creation) period. The body you generate must be available for an immediate annuity option from the moment you retire.
• Cost: Unit Linked Insurance Plans, which are popularly called ULIPs, are a good option for the longer term. But when you choose unit-linked plans you must carefully need to look into the overall cost structure, which impairs the entire return in the long-term together with the performance of the fund.
• Tax benefits: You must understand very well the tax benefits of any pension plan. Your accumulated money must be tax free; only annuities at the moment of receipt should be taxed. You will have the flexibility to figure out the annuity cycle when you retire, so that you can eventually work it out at the time of maturity, depending on the present tax rates. Making any approximates about the tax structure about that time would be very hazardous.
• Focus: Try also never to look at any additional benefits. Each of these will cost you more and, thus, reduce your maturity benefits. Any pension plan should only generate maximum retirement investment.

Best reading:

• How to Select the Right Health Insurance Policy
• Why you should invest early, Benefits

In conclusion, preparing your retirement plan will only be a winning moment, and you will never get any disadvantage with it.  Although, much sacrifice will be shouldered at the moment, but peace of mind will always be with you thinking that one day when everything has been said and done, your old age is secured and you won’t be a burden to your family.  Indeed, retirement with a plan is equals to “growing old graciously”…Plan now for your retirement, tomorrow might be too late…