Retirement Planning is most discussed but least understood topic in India. Until & Unless you have Government Job in hand, you have every reason to worry about your retirement. I will suggest that your Financial Advisor should be the last person in this world, whose advice you should follow regarding retirement planning.
The Financial Advisor will prepare your retirement based on hypothesis and assumptions which does not hold true even after 3-5 years…The basic objective of your Financial Advisor is to create sense of fear in your mind else you will not listen to him. He will start with some stupid example i.e. your current age is 30 years & you will retire at 58 years…Through his some idiotic calculations, he will show that you are carrying liabilities of million dollar and you need another billion dollar to live peacefully after retirement…All these calculations will take away your today’s peace. With these calculations, anyone will get heart attack in couple of days and it is critical that i should survive till my retirement to enjoy benefits of my retirement planning.
Now to simplify retirement planning, you need a regular source of income after you retire. Secondly as i mentioned in my one of my post that major expense post retirement is on health so its better to buy Health Insurance at early age to retire peacefully (Please read Why do we need Health Insurance?)
Coming back to regular source of income post retirement..Trust me, in whichever financial instruments you invest today..You will not get any guaranteed regular source of income after retirement. Reason being returns from none of the financial instrument today can beat the inflation. Inflation eats into your savings and will devalue your money gradually. Your financial advisor will suggest you SIP investment or ULIP Insurance but all that is crap & will not serve any purpose in your retirement planning. But don’t get dis-hearten, There are only 2 ways to ensure regular source of income after retirement & which are inseparable from fool proof retirement planning.
1. Rental Income: I have studied the retirement planning of so many old age couples and observed that the people with regular Rental income from property are best placed post retirement in terms of maintaining the lifestyle. The biggest advantage is that same asset can be inherited to legal heirs so its dual advantage i.e. retirement planning plus wealth creation. Now next big question is how to arrive at quantum of assets required for retirement planning…Its very simple, if today you need 60k per month to maintain decent lifestyle & rent from 1 flat in your locality is 20k then you should aim to own 4 flats till retirement i.e. one for yourself and 3 for rental income rather investing in stupid financial instruments. Its always better to invest in upcoming areas where rates are low but have future potential to appreciate at fast rate so with least investment you can achieve your financial goals.
2. Start your own Side business: During early 30’s you should start thinking about setting up your own side business besides job…Initially scale is not important but to test the waters. This business can be your key to successful retirement planning. If you will put your heart and soul for few years, you can take your business to next level which can be your regular source of income not even after retirement but can be source of extra income before retirement.
Hope rather trusting your Financial Advisor, you will listen to your heart and will put your eggs in right basket so that you can retire peacefully and maintain descent lifestyle after retirement.
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Hi Nitin,
I became a fan of your blog and I spare sometime everyday to read your posts.
I agree with both points however don’t you think Salaried people sometimes can’t even buy 1 flat in their lifetime and mainly they buy it on home loans where they spend almost 2.5 times of amount of loan they borrowed? Its a good idea however not easy to implement.
For a bigger investment we need to go through smaller investments first like. FD, RD, Ulips, MF etc then we can invest it into real estate or small business. Its my request to you write an article on ULIPs as well.
Regards,
Shadab
Property purchase is always a big stretch but since its an appreciating asset therefore it makes sense to go for it :)
I agree that to take this big step, its better to start with baby steps like FD, RD, ULIP etc. I will definitely write an article on ULIP.
Hi Nithin,
Nice to see your wonderful posts. I am 36 years old. I would like to plan for my retirement. Could you please provide the best and different way of retirement plans. Thanks. Kasi.
There are multiple options and few of them i have shared in my posts. It will depend on multiple factors like risk profile, existing asset liability ratio etc. If you wish to avail my personalized consultation on chargeable basis. You may call me at +91 94 800 21000 or mail me at info@nitinbhatia.in
Nitin, I need your advice on retirement / pension plans…. please help…
Clifford
Please share detailed query i.e. amount to be invested, time horizon, your age etc.