Retiremnet Planning - Part 2

From personal experience I can say that have always spent thinking I will catch up later. So at 30, I thought I have many responsibilities but when I am 40, I will start saving. However when I reached 40, there were more responsibilities so I deferred it further. Sadly my career is over and I don’t have the corpus I would have wished, today.

If I would have planned rightly I wouldn’t be in a situation where every rupee spent has to be well thought off. I also don’t want to be dependent on my sons. During my free time I sit back and think what can I do to increase my resources and secondly what advice would I give today’s youngsters on financial planning.

Please note these are my personal views and are not meant in a professional capacity.

Here are my thoughts broken down in 2 categories

Goal: To have a corpus that will allow you to maintain your standard of living post retirement

Why do you need to plan for retirement?

1. The earlier you start saving, the better for you. At 25, retirement is a long way off, but financial stability requires long term build up
2. Living for today is detrimental
3. There is no government support system for senior citizens. Even if you want to move to an old age home (a decent one) you need to have money
4. As life expectancy grows, if retirement age is not increased correspondingly, you will need to fend for a longer time post retirement
5. Families are shrinking. Don’t expect children / extended family to look after you. After all living independently and with self respect intact is what you should strive for
6. Inflation will play a big role in downsizing your savings
7. Economic recession, job insecurity will be a given
8. Health problems will increase manifold with aging

How to plan for retirement:

1. Make a table of all possible life expenses, your aspirations / expected lifestyle after retirement and factor in inflation

2. See where you stand today

3. Factor in your current earning, potential growth in earnings

4. Save in a few mandatory instruments – PPF (even if you have a PF account with your employer); Mediclaim / Health Insurance (you never know when a medical emergency will hit you)

5. As you grow professionally, keep increasing your savings in proportion

6. Keep some part of your savings liquid to be ready for any emergency

7. Invest in Stocks & mutual funds. Keep regular track of your investments

8. Invest in a pension plans with a track record

9. If you are not financially savvy, then take the help of a professional financial advisor

Planning for Retirement - Part 1

The other day while speaking to an old friend of mine, we realized that most of us (especially in the 65 plus age group) senior citizens ( married with children) have spent life assuming our sons will take care of us post retirement. I am speaking here from a very middle class perspective where we have earned enough to be comfortable, sometimes stretching the rupee but never in luxury. Our various financial responsibilities (taking care of families, probably getting sisters married etc) were taken as granted.

Somewhere we also took it as granted that our sons will look after us in old age. Here i say "sons" because though the world has changed now & gender equality is a given now (open to debate), in our times it was a given that sons, especially the oldest son took on family responsibility. Daughters were not included as it was assumed that post marriage, daughters moved on to "their" homes.

One factor was common – PF was used to get daughters married or in dire emergencies. Whatever money could be saved was saved in post office schemes, recurring deposits or insurance policies. Somewhere the comfort was that the son/s would take on the family responsibility.

However reality is very difficult from “belief”. Most of our children are not with us today. Some of our children offer to take care of us while others talk of their own mounting expenses and avoid shouldering responsibilities. For individuals like us who want to live with their self respect intact, it is a daily challenge to tackle rising costs. I also see some of my friends and hear of other’s experiences where their children talk of family assets but not of duties. In this scenario where does a senior citizen go?

Our generation made the mistake of not thinking of financial planning. I am speaking generically here. We took on duties and responsibilities because it was a given. But today we can’t expect the same from our children. In my next post I will be writing some of my observations so that young readers are aware of the potential financial mistakes early in life and can plan for their future correctly.

Will our cricketers vote in the forthcoming elections?

Reading the article " Bat, Bowl or Poll" in Mid-Day dated March 29, 2009 made me realise (and hopefully other citizens too) that our so called cricket & acting stars are Icons in name only. In deed only money rules. Reading some of the BCCI officials & ex players quotes one thing is very clear - they couldn't care less about voting (a national duty - the only thing that can move them is Money!

On one hand NGOs, ALMs are working hard to spread awareness on voting and on the other our cricketing stars , their team owners ( boasting of actors & industrialists) and BCCI officials look at voting as an avoidable chore. Ironically BCCI is headed by a Union Minister who should be promoting voting.

My wife and I are looking at rescheduling our trip so that we can vote. Maybe in the larger picture, our votes could be inconsequential. But we don't want to avoid our duty.

I see so many youngsters in our locality & members of our ALM doing so much (including helping people get their Voter I Cards, registering, getting political party representatives to meet us) to promote voting. To me these nameless people are our icons, not overpaid money loving cricketers & actors. They are the ones to emaluate.

IPL

IPL has been the flavour of the week. Every channel, newspaper is following the story with a breaking news headline! It seems as though the entire country and had only one question - What will happen to the IPL? Now that we know that IPL will be held in South Africa, I have a few observations to make on IPL -

1. IPL is a business model which can both entertain & give huge returns
2. National elections to elect a new government is a bigger priority than a business
3. It is not a team playing for the country, but various Indian teams (with non Indian players too) competing for awards /money
   
4. Lets not fool ourselves that this is about pride and cricket. Its all about money. If there was no money to be earned would players, team owners and most imporatntly BCCI be so interested?
5. Do Indian citizens know that BCCI claims to be a charitable body and therefore reaps huge tax benefits?
   
6. Amongst all these discussions, I would like to know if even one player stood up to ask a question that many Indians are asking today, " How will we vote"? Did this question even come to their minds? I don't know if there's a way they can vote from South Africa. I don't know the legalities. But do you think BCCI or any player thought of this?

Ragging - A heinous crime

I was shocked to see how a student at a medical college in Himachal Pradesh was ragged so badly that it lead to his death! Post that came news of a girl in Andhra Pradesh being ragged. Am sure there are thousands of such situations which probably never get reported. Being punished for such heinous crimes is a rare option.

Imagine the parent’s devastation. On one side they feel guilty of not taking up action when their child complained about ragging on the other side they know nothing will ever come out of the probe and the guilty will go unpunished. Even if the perpetrators are brought to book, they will escape stating they are being framed; witnesses won’t come forward; and the case will drag on. And parents of the perpetrators will move heaven and earth to ensure that their guilty wards go scot free.

What happens after ragging? Suppose a complaint does get registered. Are the students responsible rusticated? Is it ensured that they don’t get admission in other institutes through devious means? Is the case followed to its logical conclusion? Is anyone punished? I don’t know what happiness people get in degrading others. When I speak to my sons on this, they say their experiences have ranged from singing bollywood songs for a strech to greeting every senior on campus – I don’t know if they are keeping some bits off limit. But what is unfathomable is that young boys and girls don’t think of the consequences of their act while participating in degrading acts.
Obviously people who rag know some fundamentals –
- The perpetrators won’t get punished
- College Principals / Trustees will go unpunished
- Grants / financial aid won’t stop

Despite the Supreme Court's orders, ragging goes on unabated in educational institutes across India. With the Supreme Court coming down strongly on the states & colleges, can we see any real change? One can only hope so.

Dance of democracy

Mayawati as PM? Deve Gowda as PM? Is this what Indians really want today? What are the alternatives? Manmohan Singh / Sonia Gandhi / Rahul Gandhi? L K Advani? Mulayam Singh? Prakash Karat? India is at a stage today where corruption and money rule. Any of these can be the PM tomorrow not because of capability but because the party they belong to manages to win elections on the basis of false promises, money power, muscle power, fixing and the like. In this list, Manmohan Singh probably is the most qualified but is capability really the criteria here?

When India became independent & a republic, there was so much hope! Hope to be self sufficient, hope to be a progressive and secular state, hope to be a fair & just nation where the Mahatma’s words held real value. As children we saw India move from British rule to a new beginning. Yes, in Kolkata, we were besieged by refugees from erstwhile East Pakistan (now Bangladesh) and there was much despair because of riots etc, but there was still hope of a better future.

But once the Congress party started taking the electorate for granted and with their offset of becoming a family fiefdom, break away fractions and new parties became the norm. Regional parties started gaining popularity due to non governance and genuine grievances and sometimes due to power flexing. Soon they started wielding power at local levels graduating to the centre level. The seventies & eighties saw a stream of such regional parties becoming strong in various states.

I think the deterioration of Indian politics started when the focus shifted from governance to money. What started as a subtle funding operation is now a full fledged business of political parties. Need favour/s? Donate generously to the political fund. This has also ensured that a clutch of people actually hold the government in virtual control whether at the state level or central level. Think of it – why is it certain business houses and certain individuals seem to get away with murder? Why do the big builders across India get away every time? Why is it that poachers who are destroying our ecology get away? Why do corporate fraudsters escape punishment? Is it because they are above the law? Or is it because their coffers fund political parties in various ways?

Today I feel sad when I see the state of our country. Why is it that we Indians don’t collectively wake up from our slumber? Why do we always feel it is somebody else’s responsibility? Our nation is today fast spiraling downwards, but it’s in our hands and especially the youth to take charge.

You can think this is a rambling from an old man, but it’s my plea to the youth of this country to wake up and stem this rot. Be responsible when voting. Exercise your right. Think why certain events happen. And think how it will impact your life. Because today’s rampant construction, deforestations, poaching, illegal mining, corruption and non governance will destroy your tomorrow.

Costly travel plans

As I had mentioned earlier, we are planning a trip to Delhi & Kolkata. I realise that travelling has become a costly affair today.

Apart from the basic airfare / train fare, we have to factor in gifts for the relatives / friends we are visiting, F&B expenses ( if staying with relatives, may be reduced) sight seeing costs, shopping, conveyance. The list just keeps growing. Also if travelling with young children and senior citizens, one has to factor in medical costs too.

If we go for this trip, then we can only think of travelling next year. With my fixed pension, we can't deviate much from routine. It does get frustrating, but we can no longer spend assuming that the future will be managed. Today, managing daily basic costs are getting difficult so taking a holiday is actually the last priority.

other aspect to this is that many of us in the 60 plus generation defined holidays as going back to our native cities / villages etc. This way, costs were kind of controlled and the children too learnt family traditions, saw a different lifestyle and bonded with the extended family. Unfortunately today we have no one to go back to.

I do wish we had better cash flows & investments which we could utilise to break away from the daily mundane routines. But sadly that's just wishful thinking.

What is the world coming to?

Economic downturns, job losses, terrorist attacks - it seems this is the worst that the world has seen in the recent past.

20th century itself saw multiple worldwide disasters. India on her part went through the feedom struggle, famines, Chinese aggression, war with Pakistan and Emergency. Naxals / Khalistan / LTTE movements saw wilful destruction of human life & property.

Today cowardly terrorist attacks are the norm. It seems that dialouge has no value. Mindless Violence seems to be the norm. Unfortunately various reasons including lack of political will have led most problems to magnify.

But I still beleive in hope. We have seen bad days and have overcome those. I hope this too will pass.

Its Election Year!

We are planning a vacation to Kolkata and Delhi to be with my younger son for a few days. Have been therefore going through portals and sites checking for the best deal! It seems we should be able to manage a good deal, hopefully. We no longer take the train as its too cumbersome for my wife as she suffers from vericose veins and finds it difficult to sit for long streches.

Which brings me to an ad I am seeing in newspapers these days. You know its election year, when various ministries start putting out full page ads glorifying respective ministers. Similarly our civil aviation minister is sparing no efforts to get mileage! Yes, theres been a marked change from a single national airline ( Air India / Indian Airlines) to Jet Airways to the newer ones.

However just giving licenses to airlines is not the solution. Our minister should look at the fuel thats airlines are burning (wasting) while waiting to land, the pathetic infrastructure at airports, the state of our ATC, our safety norms and then claim credit. However our minister / ministry doesn't mind wasting money on full page ads to glorify themselves.

I prefer flying a full service carrier especially for Kolkata / Delhi as its more comfortable and I don't waste money buying food on board. My wife especially is looking forward to visiting Delhi as we will be with our son after nearly a year.

Let me now get back to searching for good deals!

Wish I had invested better

Just saw 2 national ads which feature Kolkata. An Aegon Religare ad featuring Irfan Khan and an Vodafone ad showcase Kolkata. Stranegly when you move away from a city you still think of the city the way you left it behind. I want to go back to Kolkata and find no change - but sadly thats no longer possible. Change is the only constant it seems.

Watching the trams which feature in the ads remind me of a different era. The slow moving trams (in comparison to the buses / cars ) have a charm of its own. In our time, conductors were freindly and tickets were cheap. When my kids were small, during our visits to Kolkata, I used to take them on the tram - it was a joyride they enjoyed! And the jhaal muri at the maidan was an added thril.

I think Irfan Khan's character in Aegon Religare commercial raises a poignant question - how many of us thought of escalating costs and planned savings keeping inflation in mind? I know from (bitter experience) that my FD's and other investments were quite ad hoc. When i had any extra money I tried to save it. But there was no calculation on basis of inflation. PF was the big saving that was supposed to take care of life.

Today's youngsters have so many options of getting the right guidance and investing wisely. With the advent of private insurance and mutual fund companies, professional broking companies, (especially after demat accounts came into existance), and qualified financial advisors, there is a huge scope to get the right financial advice for securing your future.

Maybe I should visit a financial advisor soon!

Old Age Bill

The recent bill passed by the Maharashtra Government stating that neglecting parents will ensure children are punished with fines and or jail, is welcome.

However it throws up many practical issues. I have listed some of them below-
1. If children are staying abroad, how does the government plan to enforce them to look after the parents?
2. If children send money whilst not staying with the parents, will it be deemed as looking after?
3. What happens to the clause that children have to take care of physical/ medical needs? If they are not in a position to stay with us, should it be deemed neglect?
4. If our children do not want to stay with us or drift apart, should we force / compel them to look after us?
5. Also from whatever I have read, I have not figured out if daughters & sons are equally responsible under this act. If yes, what about married daughters who don’t have a source of income? Do son – in – laws come under scope of punishment?
6. Will this Act only address issues of criminal neglect / behavior?

Though it is a sad fact that in old age one has to face many problems including bad health, children moving away from home or no longer wanting to stay in a joint family is a reality of India today. But there are many parts to it. Being a senior citizen and having seen both sides of life, will put down my personal views on this tomorrow.

Post retirement life

At 67 life has taken a very different turn. No longer considered productive for work and perceived as interfering at home has left me with few options. More often than not I feel a void in my life. My wife has a set routine and she doesn't like to step away from it. My sons are away and anyway when they are in mumbai, they are too caught up in their own world.

In our building complex too I see many of our generation in similar situations. I am talking of the male species here! The entrepeuners / businessmen off course stay busy as they are not prey to age restrictions. Ones like me having retired are caught in a time wrap.

Most youngsters avoid us (my wife says that's because we talk too much). The good part is that we are asked to become secretaries / chairman / managing commitee members as its assumed we have all the time in the world and can contribute to the welfare of the society. Which quite a few of us do. I am also a part of my ALM, which keeps me busy quite a bit. But somewhere boredom creeps in. Also there is a sense of loss - whether its from the loss of income / employment or perceived self value.

I am looking at ways & means of trying to remain busy. Hopefully I will find my calling.

Feeling a void in life

Honestly speaking I miss the frantic preparations of going to work, of being productive, of being looked up to. In comparison life is dull now. Unfortunately am not comfortable monetarily that can take off on a travelling spree. Or indulge in hobbies. I wish and I mean this – I really wish I can go back in time and plan for life after retirement. Living in Mumbai on a fixed pension is getting tougher by the day. I dread to think of the ones in a situation worse than me.

The only good part is that have started to be active in our ALM. Went for 2 meetings and hope that I can contribute to something good.

Life after retirement

Watching various ads for insurance and mutual funds makes me think that when we were young, we had limited options to save.

Our lives revolved around our PF accounts and LIC. Off course they were the only options available. UTI in its erstwhile form was the third option. There were off course community based saving options or postal schemes etc. Today there's a plethora of choice. Be it Mutual funds, insurance, health insuarnce, name it and there are multiple options open to people.

Today in my sixties, I realise that had I planned our finances well, we would not be in a vulnerable situation today. Today when my sons talk of retirement calculators, financial planning etc. I am happy for them that they can choose the best suited product at an early age. After all financial independence is the key to happiness in old age.

Whether its my friends or relatives or from what i observe, whosoever is financially independent, is living a happy life. Because its a burden to be dependent on your children or other family members. After all most family problems start with money! With timely planning one can secure one's future and live comfortably.

Saw Ghajini

Yesterday my wife and I went to see Ghajini. Though we were not very keen to see this movie, we went as we just wanted a change. Normally we always go out on Saturday evening. Thanks to malls, we can walk around quite a bit. When our sons were younger we always went out for Saturday night dinner and movie at times.

When movies were shown on Doordarshan, Sunday evening was reserved for it. So we went out on Saturday, that way my sons got to see two movies, sometimes. Also no one wanted to miss the Sunday movie. I think life was very simple those days. Today there are too many expectations and everyone is always in a hurry to get somewhere.

Now when we go out to see a movie, I realize that everything has become too expensive. The tickets itself are so costly. We can't even dream of having too many snacks because of the exoribant price. That’s why I tell my wife we should see morning shows, at least the tickets are cheaper. But the matinee show is the earliest that she wants to attend. I never realized till recently that in today’s multiplexes, morning shows are much cheaper compared to other shows.

In life also when we are young and working, we don’t think of life after retirement. Our retirement plans are sometimes the last thing in any of our plans. Today with a fixed income it is very difficult to live the way we want. I tell my sons, now that they have just started working it is important to plan for the future right from now. With escalating costs, we no longer have the freedom to spend ad hoc. All my expenses are planned. As parents we don't want to take support from our sons yet, but at the rates expenses are shooting up, I have a feeling that in the future we might have to depend on them.

Though they are in their twenties now and in their first jobs still, I tell them to plan carefully for their future. Off course today there are so many private insurance and mutual fund companies that it is easy for today’s generation to look at various options to save for the future. Financial planners always say that savings should start early and cover a spectrum of instruments. We were not so lucky for in our time we only had a few options.

Coming back to the movie, I liked it but my wife found it very violent. But yes, we had a good time undoubtedly.

My first post

I am new to the blogging world. My sons tell me it is important to have a blog these days. It is some kind of personal identification!

In our youth we were told to not expose our thoughts to all and sundry. But nowadays one’s thoughts need to be all out for everyone to see or read. Vast changes from what we have grown up with. But change is inherent.

After retirement there is not much to do, metaphorically speaking. In daily life there is quite a bit to do. But everyone assumes that you are old and there is nothing else left to do. I don’t believe in this thinking. My late father retired from work but was active till the very end. I also want to be active and not be dependent. And be free to do to whatever I want. My wife has always supported me and I tell my wife that now is the time to sit back and enjoy.

Having a blog was my younger son’s idea. He told me, “baba, you should do something that you have never done”. So here I am blogging! I don’t have any agenda, maybe I will ramble on, maybe I will write something which will be interesting, I don’t know. I am starting a new journey with the hope that it will be enjoyable.