Retirement planning

HERE'S EVERYTHING YOU NEED TO KNOW ABOUT PLANNING FOR YOUR FUTURE

- Sayi Krishna

When my neighbour, Vijayalakshmi Krishna's son visited her a few weeks ago, he told her something which brought her equal parts respite and turmoil.

He told her not to scrimp and save her and her husband's retirement corpus for either her son or her grandchildren because the Rs 25 lakh she had in her bank account would not count for much in ten years.

Vijayalakshmi was crestfallen that she would not be able to leave anything for her grandchildren. But that is the nature of money sitting in a fixed deposit. As a child, Vijayalakshmi believed that Rs 25 lakh was a King's ransom, and the interest she could accrue on it, nearly 13 per cent then, was a bounty. Compare that to today's interest on bank deposits which has shrunk to single digits. Not to mention all other risk factors, black swan events and more, a lakh of rupees in a fixed deposit today is literally nothing tomorrow.

One of the biggest challenges that retirees face is to stretch their savings till the last day of their life. A person who retires at 60, must be able to make his savings last for the next 25 to 30 years, because life expectancy has increased, and women tend to live longer that men. Therefore, the thought of retirement can bring about a mix of emotions - joy, relief (no more 9-to-5), or anxiety (who will look after me when I'm old, will my money last me till the end, will I be able to manage independently?)

A good retirement plan must put money into your hands even as the income from your salary stops. It should also balance the growth of your portfolio with your individual risk appetite and prepare you to navigate retirement confidently and comfortably.

A good financial planner will conduct a thorough diagnosis of your financial situation, chart out a plan and recommend actions that are in line with your goals and objectives.