When the clock is ticking, begin your early retirement plan
Retirement provision is an old hit that urgently needs fresh paint.
Retirement planning, that inevitable palaver like tomorrow’s sunrise, is a story marked by widespread unwillingness – a global phenomenon, but one that is particularly noticeable in third world areas like India. In fact, the type of retirement plan we see usually leaves many questions unanswered.
No more swear words, here’s my point: The lay investor is not ready for a phase in his life when active sources of income have rejuvenated. He is worse off than you actually think because he started late and only recently adjusted to investment advice.
The fact that he’s retiring at the speed of Hailey’s comet doesn’t help either, and he knows quite well his unfinished business – a half-EMI home, a grown-up one, but financially dependent child, spouse struggling with what may be diagnosed as severe diabetes in a few years. Well you get the picture, don’t you?
Retirement provision is an old hit that urgently needs fresh paint. That’s all we can talk about at this point. It was not always so, of course, when the investor in question was a much younger individual income earner than he could have addressed the problem more efficiently, at a fraction of the cost he will now have.
Whatever else you do, please keep the following in mind:
Start actively allocating your assets as early as possible according to your risk profile. It goes without saying that a younger investor can take more risks than a relatively mature person. Do this with one goal in mind: retirement.
Invest methodically. Systematic investment plans for equity funds would be a useful tool, especially for the patient investor looking to build a nest egg over a reasonable period of time.
Other short-term investment goals can be achieved without compromising on the core issue – developing and implementing a realistic retirement plan.
The perfect plan would take into account the two main enemies of the investor in question – inflation and taxes. Incidentally, both can possibly team up to decimate even the best plan.
Explain shocking price increases in two very critical areas – healthcare and food. Both are money guzzlers. The first one, in particular, would become more important to you in the days ahead.
There are many myths that may need to be cleared up right away. “For me, the transport costs would no longer be as high as they used to be,” is one theory that is tested more in violation than compliance. Indeed, from time to time, fuel prices would surprise and the cost of servicing private vehicles would hit new highs. This also applies to usage fees for public transport.
The lack of preparation for retirement needs to be addressed on several fronts. Savings and investments would be the most important issue, and deficits must be avoided at all costs. Your years of retirement could be boring, dreary, and drawn out. Engage with them when you have to, but now is the time to do your homework. So put that Beethoven CD away, cancel the trip to the Bahamas, and focus on what we just discussed today. The clock is ticking for you … tick, tick, tick.
The author is Director, Wishlist Capital Advisors