“Without question, the material world and your everyday needs distract you from living meaningfully.” – Menachem Mendel Schneerson
We usually ask questions to learn something or to clarify something or to interrogate or to find a solution. But finding the answer is up to us.
When it comes to our life, we ask a lot of questions. Particularly, when we think about our retirement, the first question we ask is “When should I start planning for retirement?”
The answer you want:
“No question is so difficult to answer as that to which the answer is obvious.”– George Bernard Shaw.
Every question has an answer. Like I mentioned before, it is up to us to find the answer. We are the ones who are not ready to accept the obvious.
So, if you are looking for the obvious answer, then you have to be ready to accept the truth. I do not say you have to believe blindly. If you want you can consult other retirees or financial advisors until you get the obvious answer.
The obvious answer to the obvious question:
Now, for the obvious answer to the question is “as soon as you get your first job”.
You may be shocked to hear this answer, or you may think it is too soon, but you will agree with me if you really think about the reality of life.
You get your first job in your early twenties. Don’t forget it is the beginning of your life. You may think, you can start your retirement planning in the thirties, but at that time you will get married and maybe you will have a child. Then, you have to focus on your family, child’s education, your child’s marriage, and purchasing your dream home, etc. You can’t even think about future.
When you think, “now I can start saving for my retirement”, you will be hardly a few years away from your retirement. That’s why I say the sooner you start your retirement plan, the better.
Change is unchanged: Early Retirement
“There is nothing permanent except change.” – Heraclitus.
‘Change is unchanged’ is a Universal truth. We are making a change, and the change is showing an effect on us. We are moving towards the change. Now, the trend of our generation is ‘Early retirement’. Nothing will hold us too long. The previous generation is known to work hard. They lived well-planned life. We are known to work smart.
Why would you like to retire early from your job?
No work… No Pressure… We can simply enjoy life by relaxing…
“Work life is full of pressure and retired life is full of pleasure”.
This is what we think generally.
BUT…. there is another side to retirement. You can escape from work, but you can’t escape from expenses.
In retirement, you will continue to get all your bills without the comfort of a paycheque!
Early retirement and longevity
Nowadays, science and technologies are proving that humans can live longer than expected. So, we are expected to live more than what we have expected after our retirement. Do you really think 5 or 10 years of savings will be enough after your retirement, especially when you won’t get your regular salary?
During this fast-paced life, we don’t have time to pause and see the changes. Before your retirement, you have income to pay the bill and for other needs. But, after retirement, you won’t get the income, yet you have to pay the bills and have all the needs.
Retirement is one of the biggest changes in our life. So, before taking the early retirement, ask yourself the following questions.
Am I ready for early retirement?
i.e. Will my savings help me for my early retirement?
Am I really ready to accept the change?
i.e. Am I ready to face all the expenses without any income?
You have to work hard and have to reduce your unwanted expenses till you say ‘yes’ to all these questions. Don’t forget, ‘you can’t cry over spilt milk’. Regretting later is better than start acting today.
Retirement and Inflation:
It is my humble opinion that we have not realised the importance of retirement planning.
Why is retirement planning all that important?
Have you ever noticed what was written on the rear-view mirror of your Car or bike?
“Objects in the mirror are closer than they appear”
Similarly, your Retirement View Mirror says “Objects in retirement are Costlier than you imagine”.
Day by day, things are becoming costly because of inflation. Inflation is a potential threat which can damage the quality of your retired life.
The logical long-term view of your question:
Retirement is a long-term goal of our life. So, you have to invest in long-term investment plans.
In case you plan to retire at the age of 60, and you need post-retirement income for 20 years after retirement, then, you have to save at least before 20 years of your retirement. You can’t get the 20 years benefit from the investments in your last few years.
I do not say you have to save all your money for your future. You need to control unwanted expenses. You need to sacrifice and control your desires. You have to put a budget for everything.
Everything you do is for your best.
Planning makes all the difference to the quality of our retired life.
In cricket, if we start scoring from the first ball, our required run rate will be less, and the target is easy to achieve.
Similarly, if you start planning for your retirement when you are young, it is easy for you to accumulate the required retirement corpus.
So far, if you have not started, then when do you need to start planning for your retirement?
If you have not scored in the first ball, then from when do you need to start scoring…..? From the very next ball.
Can we all start planning for our retirement from our very next pay-cheque?
(K. Ramalingam is the Chief Financial Planner at www.holisticInvestment.in, a financial planning and wealth management company.)