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RETIREMENET PLANNING FOR YOUTH

Contents
1. Preface
2. Introduction of Retirement Planning
3. Needs for Retirement Planning
4. Hurdles in the Retirement Planning
5. Retirement & Wealth Planning
6. Steps in Retirement Planning
7. Avenues for Retirement Planning
8. Central government’s National Pension
9. Skeletal of individual Retirement Planning
10. Implementing individual Retirement Plan
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Introduction of Retirement Planning

Retirement planning for youth I have written this book basically for the young brothers & sisters
of India. Unfortunately in our country, retirement planning is considered to be topic after actual
retirement. Due to this fact, today more than 64% of the senior citizens population has to work
hard to earn for bread & butter. This is bitter truth that they have either ignored the importance
at young age or nobody has guided them about the same. People start thinking about
retirement planning after they cross 2/3rd of their life that is after attain the age of 55 or 60. But
at the juncture it is in vain as one has lost time, money, alternatives & resources for retirement
planning. If one can understand the concept & importance of retirement planning at the early
age of life, he cannot only dream of Golden Post Retirement Life but he can enjoy the working
life in most prudent way. Little time, little money & little planning at young will result into
prosperous show in the post retired life.
A few years ago back, I had an opportunity in a program to discuss with the senior citizens, who
have crossed 60 years. The topic for the discussion was “Financial planning of the senior
citizens.” During the course of the discussion, it was transpired that most of the senior citizens
are not aware of the financial planning. Right from the birth till the retirement, neither they had
felt any need for financial planning nor had they thought of it even before. This was the
outcome of the discussion. When I discussed with them on this financial planning for over two
hours, most of them remarked that they are hearing about this for the first time. This was a
horrifying experience as it was revealed that more than 72% of the senior citizens present had
no financial support whatsoever. For their daily livelihood, they had to work. Some of them
work in cloth shops, some in dispensaries, some in institutions & some were earning their
livelihood by selling drop sticks, books, etc. I was astonished to hear, when one senior citizen
narrated his experience of working in a hotel. The treatment given to him by the customers of
the hotel, owner of the hotel & the colleague was very much disgusting. On hearing this, I
decided to bring the reality to the focus. In the absence or the financial support, the difficulties
experienced by the senior citizens are not only a shame on the part of the individual but also the
society. I then decided to study this subject & to find a solution to come out of this problem. I
started studying the financial management of the senior citizens. I discussed over one thousand
senior citizens from various levels. I had free & frank discussions with them about various
financial issues. I could get good insight. One thing I understand that the retirement planning in
not at all an activity to be undertaken only after retirement. In fact, retirement planning should
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begin at the young age while one is working. Then only it can be managed well & adequate time
can be given to this vital subject some of the experiences of the senior citizens were upsetting.

Authors Prof. Kshitij Patukale

1. RETIREMENTE PLANNING & IMPORTANCE OF MONEY

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 Growing age & reducing after retirement

 Start working at the age of 25 years & retiring at the age of 60 means that of the life span of
90-95 years, earning for 35 years & over 35 years will be only consuming the reserves.
 Man is the discipline of the money
 You are honored only if you have money
 You save money, then money will save you
 Those who consume whatever they earn, they will die at difficult times, however, those who
act wisely, they are saved in difficult times.
-Samarth Ramada’s Swami-
One retired citizen narrated his experience as he gave his money received after retirement to his
son for purchase of flat & subsequently, this gentle man & his better half had to stay in an old
age home. One fellow said that he helped by extending a hand loan to his relative for his
business from out of money received on retirement & still this amount has not been returned.
One fellow narrated his history & said that whatever he had received on retirement were
entirely spent on medical treatment. Some senior citizens had real estate but they had no
liquidity. They had problem of easy conversion of the real estate in cash & hence, they were
spending a miserable life. This means financial resource was there but problem of liquidity was
severe. Of all of these citizens, those who were retires from the state Governments & earning
pension, they were little better off. In this case, the hike in prices was eating up whatever little
amount of pension they were getting. Of course, they various reasons for this & the most
important of it is the speed at which the life is progressing. On all fronts & all aspects, our life
style has under gone a sea change. During the last 10-15 years, due to technological
advancement & the communication revolution, introduction of computer& mobile phones, the
whole world has become a global village.
While studying all this, it is understood that the retirement planning should begin during the
beginning of the young age. Everyone should remember that he has to retire one day or the
other & should undertake retirement planning right from the young age only. There is no
alternative to anyone. It should be remembered here that even the government has stopped
the person to the new recruits. While going through the books available, it was observed that
there are very few books available on the subject of retirement planning.
On this subject, after a comprehensive study, a simplified strategy needs to be worked out. Then
on this basis, everyone would be able to plan retirement independently. This book will be useful
to all those from 18 years old to those who are at the age of 58-60 on the verge of retirement.
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By using the strategy detailed in this book, each one will be able to chalk, out his strategy
depending on his age & the financial position. For working out retirement plan, one has to think
of various facets of one’s life. How these aspects are made applicable has been discussed in this
book. Perhaps, all the aspects discussed in this book will not be applicable to all the people. So
also on some of the aspects, a few individuals will have to think deep & some new aspects will
have also to be thought of. Every individual is an independent entity & his circumstances are
also different. We come across different personalities in one family. Hence, everyone’s
retirement will be independent. I am confident that this book will be provide a direction & be
useful to formulate own retirement plan. As stated earlier, this book is for the youngsters. Those
who are in their twenties or thirties will be benefited more. Even the youngsters in forties will
be able to make out successfully their retirement plan. This book has comprehensively
considered all aspects of post-retirement. However, the thrust is given on financial planning.
This book will be very useful to the women also. I would like to suggest that working women
before marriage & two to three years after marriage should invest for the retirement planning in
joint names. Because once the family responsibility comes in it is very difficult to set aside
sizeable amount for the retirement planning. Everyone should read this book & enrich his
retired life from the financial point of view. During the lifetime, one should enjoy life from all
fronts. Apart from own life, one should plan & make financial provisions for the better half
(spouse) during her lifetime. Here it is important to remember that one should not be
sentimental & should ensure that self-earned money should be within one’s control. The
enjoyable old age should be in your hands only. Accordingly, the retirement plan be prepared &
implemented meticulously.
RETIREMENT:-Some questions
1. You are going to live more than your grandparents. Perhaps, you will be retiring early than
your grandparents. You have a longer retired lifespan. That too when you have limited/ reduced
earning resources after retirement. Have you planned to face this situation?
2. The standard of living & the price line is constantly on a rising trend. Today’s Rs. 10,000.00
means Rs. 40,000.00 lakhs after one year. Will you retirement fund earn that much of income?

3. Cost of living is constantly growing፡

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Item Price 1990 Today’s price Price in2ooo % increase

Potato 2 kg. 1.50 12 42 300%
Petrol 1ltr 17 56 144 255%
Cinema ticket 13 100 400 400%
4. Women’s lifespan has increased. Means your better half is going to live longer than you.
Have you made financial provision for here till her death?
5. Medical expenses will raise four-folds. You will also face health problems. Have you made
adequate provision for this?

Name of No. of cells Expenditure Today’s Estimated % increase

The diseases On a doctor In 1990 Expenditure Expenses in
In a month 2030

Cough & cold 1 30 150 600 400

diabetes 1 200 1500 4000 267
asthma Twice in a 150 1200 4500 400
month
Spondylotis Once in 2500 15000 30000 200
Three
months
Growth of Once in two 300 4000 15000 375
prostate months
This has been taken as an illustration, which includes doctor’s fees, medicines & to-and-fro
transport to the doctor.
6. Do you know that if you start early, the fund will be greater?
a) Early beginners
b) Late beginners
Investment of Rs.10, 000.00 lakhs at 8% compound rate of interest started at the age of 30
years up to the age of 60 years.
Investment of Rs. 25, 000.00 lakhs at 8% compound rate of interest started at the age of 46
years up to the age of 60 years.
When you will start investing for retirement, after few years or from today?
a. Early beginners b. Late beginners
Rs. 1,132, 822.00 Rs. 678,803.00
Rs. 300,000.00 Rs.375,000.00
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Investment of Rs. 10,000 at 8% compound Invested of Rs. 25,000 at 8% compound

Rate of infected started at the age of 30 Rate of infected started at the age of 46
Years up to the age of 60 years year up to the age of 60 years
2. NEED FOR RETIREMENT PLANNING
Every youngster firmly believes that he is neither going to retire nor be old. Because of this
attitude, he feels that he is not at all concerned with pension & retirement planning. He is not
willing to even listen to about retirement planning or financial planning. There are various
reasons for this. However, the principal reason is that the retirement age is too far. I am talking
about a youngster, who is in twenties because a wise man has to plan his retirement in because
20th& 25th. One should remember that in finance & savings, the early beginners achieve greater
success. Today, the situation is such that even at forties the youngsters go on switching from
one financial scheme to another. They really do not understand the importance of the financial
planning. This is a very serious issue. They have interest in discussing issue like politics,
environment & international issues, etc. while arguing on these issues vehemently/strongly/,
they do not consider the retirement planning as an important issue. After sixty, the strange
situations develop. Nothing remains but to repent as the time & the opportunity are already
lost. Therefore, we have to study & understand the pension& retirement planning. Whether you
are in the thirties or forties or even on the verge of retirement, your first priority should be
retirement planning & financial planning for the retired life. If you are in employment of a
professional or a trader or an agriculturist or journalist or an artist or in Information Technology
(IT) sector or in the engineering industry, remember one day or the other, you are going to
retire. We have no option but to accept it, the only thing in your hand to accept the retirement
as a reality & accordingly prepare your mindset. For this purpose, one has to find out time &
preparedness for the retirement planning. If one gives time required for this retirement
planning & suitable steps are taken, one will not be required to repent. In the traditional joint
families, a very good thought was giver to the retirement planning. The youngsters & the
earning members in the family used to take care of the retired elders till they breathe last. Even
today, this system is vague in good number of families. However, after the globalization, we are
leading to the nuclear families, which means the parents are in one country, the son in another
& the daughter-in-law in the third country & the grandchildren in the fourth one. This situation
generally cannot be avoided. India has reached a development stage & having a vision of being
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world power by 2020. And, in such situation, career making & overseas jobs are inevitable. It
cannot be avoided. In fact, against the backdrop of the globalization, the importance of the
retirement planning has further increased. During the last two decades, the middle class is
experiencing richness &free availability of tools & development opportunities, which were
neither heard of nor seen during the earlier century. The rate of economic development is very
good. Foreign exchange reserves have reached a new high & are continuously growing. There is
good amount of liquidity with the masses the computer & communication has really drastically
turned the lifestyle. The life has become so dynamic that the working force is finding newer
attractive careers & professional opportunities day in & day out.
Altogether, there is a vast difference in the lifestyle before 25 years &today, which has been
exactly in 180 degree. Constant development & expansion has become the essence today’s
lifestyle. In this entire process, financial transactions have become a part of lifestyle.
Journey of money

Earn money

Increase money

Save money

Protect saved money

Spend money in the right direction

The balance money to be handed over to the dear ones
Obviously, you may feel what the necessity for the youngsters to think of the retirement plan.
Since the young age comes only once & in this phase instead of enjoyment & making life cool,
why should we think of retirement planning? But wait. I am going to give justification why you
should think about the retirement planning right now. For example,
1. Growing Life span: our average lifespan is growing. In 1947 our average life span was 42 years.
Hence, at that time, the life expectancy was only up to 60-65 years. This was then our ideas of
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old age. The government of India had appointed a committee, which is known as OASIS
committee-Old Age Social income security committee. The committee, in its report given in the
year 2000, has observed that, in the organized sector, the life expectancy would be, henceforth,
75 years. Because of the advancement of medical science & changed living style, living longer
years will be essential. It is estimated that, in the year 2030, the average lifespan of the Indians
would be 92 years. It means we have to live about 30-35 years after retirement. Keeping in view
the age of the spouse, we have to continue our battle about 30 to 35 years after retirement. To
put it other way, we will have 1/3rd life after retirement. Living longer is a challenge &, at the
same time, an evil of the new world.
2. Employment without Pension Benefit: Almost there are no government jobs now (whatever
available is too meager). The government has already taken a decision that those who join the
employment after 2005 will not be entitled to receive pension. In fact, in good old days, the
pension was one of the prime attractions for government job! Pension after retirement till the
death was the crux of the issue. Now the government has withdrawn this pension benefit. Hence,
it is certain whether you are in the government service or in the private sector; you will have to
make provisions for the retired life. The rates of interest on the provident Fund (PF) accumulation,
while in service, are also falling. In 1990, this rate was 12%, which has fallen to 8.5% &, in future, it
is likely that it will further drop. It means neither the government nor your employer is willing to
share the burden of your retired life. Unlike the social security schemes in developed countries like
USA & Europe, we do not have any such scheme. In a way, your employer & the government have
left you to winds. This should always be remembered!.
3. Changed Life Style: We are speedily changing our life style from joint families to nuclear
families. The number of old people is increasing rapidly. Keeping in mind the present radical
concept of development & the acceptance of western life style, do not keep any room for
assuming that our kids will take our care during our old age. It is possible that this will be a day
dream. In spite of the fact that our kids are good & that we have brought them in imbibing good
culture, the outside circumstances are so fast changing that we cannot assume any government,
even of our kids only the money that you have saved will take care of our post retirement life.
Generally, one starts earning at the age of 20 to 25 years. In the early period, this earning is
undoubtedly meager. Gradually, it starts increasing. It reaches the peak level at the time of your
retirement at the age of 60 years. Then our expenditure increases &, gradually, the saved
investment start melting. On the one hand, increasing sky-high price line & medical expenses, it
has become a challenge to retain the saved money during the life time
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Saving and Expenditures Retirements

Saving

Working life

Death 10 20 30 40 50 60 70 80

Age

4. Increasing Expenses & Reducing Earnings: continuous inflations have become a great
problem. During the last 15 years, the petrol prices have increased from Rs. 15 to about Rs. 70
per liters, Sugar & wheat, which were available at Rs. 71-per kg., have reached about Rs. 50 per
kg. In addition, the government is gradually releasing its control on the essential commodities &
making it open to the market forces. Now, we have to cultivate this price hike process as a
habit. At the same time, as the age advances, our physical capabilities are going to be
decreased. This means our propensity to save is also going to be decreased. The body, which
was capable of working for 12 hours per day, will reduce its capability to work only to 5 to 6
hours at the age of 60 years. This is bound to have adverse impact on our earning capacity.
5. Increased Medical Expenses: It is beyond doubt that our life is getting bearable due to
advancement in the medical field. However, the expenses required for meeting this medical
treatment are beyond one’s bearing capacity. Although it is true that man has overcome the life
taking diseases like smallpox, plague & polio, still diabetes & blood pressure has become life
partner. The shadow of these hidden diseases remains always hanging on us. Expenditure on
medicines on these diseases has become a part of our regular monthly budget. It also grows
gradually. This means it is needless to say that we have to make sizeable provision for the
medical expenses & the probable sugary.
6. Cost of Living:-It will be enough to account for the rise in prices of only grocery & medical
expenses. Our cost of living is also constantly growing. Increases in municipal taxes, land prices,
auto/bus fares in the city, where we live in, are ever increasing. Due to rapid urbanization,
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amount of risk & its scope is also increasing. In old days, where we were required to spend one
hour to reach a local destination, today the same distance require two hours. It will not be out
of proportion, perhaps. 20 years here on wards, it might take three hours. Cost of time is
growing rapidly. Technology advancement has made service in roads in our living & it is likely
that our present living style may be obsolete in the times to come.
I hope that the above few important reasons are sufficient to attract the attention towards
retirement planning. But it is essential to start retirement planning at the right time & undertake
its implementation.
What is this retirement planning? Really speaking, this is not a difficult science & not even
unattainable challenge. Broadly, we may say that retirement planning means implementation of
pre-decided financial plan during the young age for the life after retirement. In other words,
retirement planning means financial plans for sustainable living after retirement. Retirement
planning is financial planning undertaken during the young age to avoid any dependence on
anyone during the retired life. Financial planning done to remain self-reliant during the retired
life means retirement planning. Today there are more than 14 core retirees, who have crossed
sixty years age. That means12% of the population is living beyond the retirement age. Although
today India is the youngest country (average age 21 years), but in 2040, more than 30% of the
Indian population will be enjoying the retired life. That means today’s youths are going to be old
& retired citizens of tomorrow. As the life expectancy grows the number of senior retired
members in the family will increases. In every house, there will be, in addition to parents, the
presence of grandparents too. In cases, where there is only one son or a daughter, perhaps
there may be grandparents from both sides. The picture is gloomy where one/two person(s) is/
are earning & they have to support eight senior citizens. We cannot imagine what will be the
plight of the then family.
Everybody feels that retired life is quite enjoyable. After putting in hard work & after fulfilling all
the family responsibilities & obligations on the eve of the life, one naturally expects that this
period should be enjoyable of satisfaction. However, in the absence of retirement planning, one
needs to pray for early death. Although it is true that everyone has to meet the death one day
or the other, but it is everyone’s expectation that one should die in good state. Retirement
planning is a tool to really enjoy the retirement life with warm confronts. There are various
aspects of retirement planning apart from financial planning, health planning, lifestyle planning
& relations planning, religious planning, etc. however, one should not forget to make a balance
of all these aspects as the financial planning is fundamental to it.
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4. HURDLES IN THE RETIREMENT PLANNING

The most important hurdle/difficulty/ in the retirement planning is our mindset & the absence
of guidance. You will be surprised to know that while surveying more than 80% of the people
admitted that they had not realized the importance of the retirement planning during their
young age. Our mindset is not to open our cards. It means not to discuss our difficulties.
Whenever two friends meet the first question they will ask is, “How do you do?” the answer is
“well”. Because of this dialogue, the problems & difficulties encounter, are not discussed any
time at all. Normally, there is a tendency not to disclose the difficulties &, more particularly,
financial difficulties. We conveniently forget that everywhere the case is the same. Usually, our
deliberate attempt is to project our image as if everything is fine & going well. In fact, if
difficulties are discussed, someway, solution comes out. We can learn from other person’s
experience. The only requirement is that we should speak out. Discuss the probable solution.
Wise-men do discuss their problems frankly & find a way out to the difficulty. However, many
people lose this opportunity. After the retirement, our feelings are very soft. We always have an
unnecessary fear in our mind, whether the other person will listen to me? Will he/she has
interest in listening to me? In fact, everyone passes through one or other difficulties & also find
out some solution, problems different from person to person. We should admit that everyone
lives with some or the other problem.
The greatest hurdle in the retirement planning is the absence of discussion, consequently,
absence of guidance & resultantly not feeling the seriousness of the retirement planning. While
we discuss the other social problems & the circumstance, the need is that we should discuss
about our future with an appropriate individual. Here, I will tell you a short story. There was a
farmer. When he got married, he was a farm laborer. His better half & he himself put in hard
work &, gradually, purchased land one by one. He purchased a total agricultural land of 12
acres. He had three issues. Now he became old. As long as his wife was alive, she is to take his
car & after her death, no one was taking his care. The sons got the agricultural land distributed.
They were enjoying their life along with their families. If at all anyone remember him, then he
was to have his lunch with one son & dinner with another. This is how he was spending his life.
He was very much tired of this life. He started feeling that it would have been better if I would
have remained as a farm laborer. One day, one of his friends, who were residing in the nearby
urban place, came to meet him. The realized the state of affair & he said, “My dear friend, I will
find out a sound solution to your problem.” Days passed, one day, early in the morning, two
well-dressed officers visited the farmer’s house. They inquired about him. With a curiously to
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know who has come to see the old man, the three sons with their kids gathered at the scene.
The officers told in loud voice (with the objective that the others present will hear it). Oh Farmer
Babu, when will you be coming to receive the amount of your deposit placed with our bank
some twenty years ago &which has now become rupees ten Br.? After the breakfast, the
officers left. From next day morning, the farmer started getting morning tea at 6 o’clock, lunch
at 12 noon. The three sons &the daughter-in-law started taking good care of the old farmer. The
farmer declared that one who will take his excellent care will receive the deposit amount after
his death. In this way, he had a satisfactory life till his death. Keeping aside the story, we should
know the importance of the moral of the story.
The most significant point in the retirement planning is your present age & the retirement
age. This point may also turn out to be a hurdle. Generally, today’s youth start earning at the
age of 20 to 25 years. For commencing the investment & the retirement planning, this is the
right age. The reason being the time available at the disposal of the youth for investment &
planning is substantially large. Because of this, one can start investing with small amount to
achieve the financial target. On number of occasions, this distance in age becomes a hurdle. At
this age, one has a feeling that there is no hurry. Now is the time to enjoy the life, just now, I
have started earning money. Till this time, I was dependent on my father’s income. Now is the
time to enjoy on own earned money. Let me enjoy. I will see about the retirement planning
later. In fact, this is the right time when guidance is very much required. If there are no good
friends, there is a possibility of a threat to the planning. One does not know from where the
money comes &where it goes. The young mind is not in a mood to listen anyone. The friends,
who participate in the enjoyment, make irreparable/irreversible/ harm to the life. Lot of time
has passed by when you realize this. This book has been written for those youngsters, who are
in their 20s to 40s. Of course, this book will also be helpful to those who are beyond this age
group. The main purpose of writing this book is to ensure that the youngsters should
understand the need & importance of retirement planning & they should be able to enjoy
financially independent retired life. A youngster at 20 feels that just now he has started earning
& his means are meager. All that he is earning gets exhausted. There is no balance for adapting
to the new fashions & for enjoyment. Monthly expenditure, installments of the credit card, two-
wheeler & four wheeler. Nothing remains in hand. Nothing remains in hand. Besides, he should
have his own house as he has to marry soon. He must save money.
All this is true. But it is equally true that you should set aside some amount for the
retirement plan. The more the time for retirement, the more will be the amount that one will
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have at the time of retirement. Let’s take an example. There were two friends-Sujeata & Babu.
They were living nearby. They had studied in one school & a college. Ages of both were about 25
years. Luckily, both got employment at the same time, that too in one company & on the same
salary. Once Mr. Babu’s uncle, who was also resident of their building, said, “Oh! Boys you are
still bade lure. You have no much responsibility. Start investing for the retirement now on
wards.” Mr. Babu has nicely explained the concept of retirement planning & convinced them.
Afterwards, Sujeata said to Babu laughingly, “see how Babu’s uncle was twisting us, we enjoyed
the time pass”. Babu was serious & she was convinced by the point made out by Babu’s uncle.
She started investing Rs. 25‚000 lakhs -every year in the retirement plan. However, she could
invest this only for a six-year period, i.e., up to her age of 30 years. After wards, for one reason
or the other, she could not save. Time was passing by Sujeata was convinced about the
retirement plan after 10 years & he started saving. Rs.25, 000 lakhs in the retirement plan. He
saved Rs.25, 000 lakhs per annum till the attainment of 65 years of age. After 65 years of age,
Sujeata received Rs.45.23 lakhs. However, at the same time Babu received Br.20 (compounded
interest at 10% per annum). It means after investing Rs.7.5 lakhs over 30 years. He received
Rs.10‚000 lakhs less than Sujeata. Sujeata’s investment of Rs.1.5 lakhs was invested for a longer
time. She co lakhs uld get a sizable amount.
PROBABLE IMPACT OF THE RISING PRICES
If we account for the present rate of growth of inflation, today’s (2010) annual expenditure of
Rs.1.50 lakhs will reach to Rs.5.94 lakhs by 2040. It means in order to ensure today’s standard of
life in the year 2040, one will require near about Rs. 6.

Standard of life

Inflation
 15

years

In this way, one will understand the importance of starting the investment early. It is a wise
proposition to invest maximum amount in the retirement planning scheme till the attainment of
30 years of age. Particularly, the girls should keep their earnings from the employment or
business or profession, if there is no pre-emption of family expenditure. It is the need of the
hour that, for bright retirement life, it is essential that some amount be set aside in a separate
account. If not entire amount can be saved, save partially & keep it separately earmarked. It
should be remembered that this is an opportunity for maintaining financial independence in the
future. Normally, today one gets married at around 30 years of age. After the dreamy days of
the married life, one comes across the subject “retirement planning”. He has to listen just now
we have started our family life. These days will not come back in our life. Besides there are kids
expenditure, their cloths, school, transport, medicines. We find it difficult to make our both
ends meet. Let us see after some time. “Interestingly, during these days, there is thinking that
whatever we could not get at this age, we should provide it to our kid. We studied in regional
language. Our kids should learn in English medium schools. Then to get admission in English
medium school, a hefty donation needs to be given, the high education fees, struggle to
maintain the standard of life in the school & at the end, nothing remains in hand to save. False
ideas of reputation & status take away the money in every possible way. As the kids grow, their
expenditure soon increasing their class fees, hobby classes, too is, pocket money, etc. Money
always falls short. In such a situation, if there is arrival of any new member in the family, it adds
to the financial crisis. Again, the same problems of comparison & completion start. One does
not know when he/she has reached years of age.

At the age of 40 year if anyone asks, ‘’ how much have you saved in public provident fund or what
is your retirement planning? Then with a great sigh of relief, she says, “Frankly speaking, the
current earnings are in adequate to meet the demands, what are you asking for retirement? I am
giving too good education to my kids & make them achieve the sky heights. These kids will take
our care after the retirement. You do not worry. Whatever we have spent on grooming them and
the values of life, we have imbibed in them, will not go waste. In this manner, the life is spent. At
the age of 50, we start complaining about the high cost of the university education unless one has
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a post-graduation, how will they get jobs/ employment? Besides, their marriage, business & career
take away lot of money. Where will the money come for retirement planning? In this way, we
achieve the age of retirement & then one comes to know that we have no savings. The whole life
has been spent in grooming the kids &, now at this age, what is the old age provision for us?

Almost all have their journey to the retirement in this way. Today, more than 62% of senior
citizens have to put in full –time work to earn their livelihood. 20% have to work part time.
There is a misunderstanding that, for retirement planning; one has to be rich or we should have
substantial money. Really speaking, strong desire & sustained efforts, disciplined investment is
the secret of the retirement planning. Financial difficulties are unavoidable part of every one’s
life. Those keep coming. We start finding some solution to overcome it. However, we spend
impatiently from our savings & create a long–term problem. For creating wealth, one should not
wait to gain lottery or should not resort to robbery. The need is that of the regular savings &
investment.

Retire mint planning is a long –term planning. For this purpose, we have to set aside regularly &
convincingly some amount. For bright future, one has to learn to sacrifice some of the present
enjoyments. Avoiding small, small attractions, one should create wealth for the future. Everyone
has short & long-term goals in life. For this, one has to keep saving. This cannot be achieved in
one stroke. The main hurdles in the retirement planning are occasional illness, temporarily
arisen financial crisis, etc. At the same time, the amount kept aside for retirement planning can
be conveniently used to meet these short-term demands. If the retirement plan has been
designed such that the amount placed in retirement plan cannot be withdrawn until the
attainment of age of 60 years, then such amount normally remains safe. If at all it can with-
drawn & for which lot of paper work is required as is a time- consuming process, in such
situation, such amount is hardly withdrawn. If there are no such hurdles tendency is that the
amount is withdrawn. Human nature is such that he doesn’t think of long-term he/ she never
bothers to imagine what will happen after 20 or 30 years. Therefore, the need of hour is to
cultivate with due consciousness habit of long-term thinking during the young age.

One should start the habit of sharing & discussing about financial planning, finical difficulties at
the young age with our friends, relatives & senior citizens around us. We should also understand
how the eminent people earn & spend money. We should not apprehend that a person is rich
meaning that he has inherited properly from the ancestors or he has taken bribe. On the
contrary, we should as a curiously try to understand his life style & try to explore possibility of
 17

bringing change in our life style. Large number of senior people is eager to share their
experiences. In fact, the youngsters should take advantage of this opportunity. We should enlarge
our canvas constantly. We should learn from others & enrich our knowledge.
Every youngster should take a pledge that has long as we (husband & wife) are alive, we will
enjoy financial independence & lead a satisfied life. For that purpose, one should not be
tempted to be a victim of short-term gains. They should resolve to build up a strong retirement
fund & rich retired life should be everyone’s dream. Every day we should remind ourselves
about that dream. When spending fabulously, “we should ask ourselves,” “Is this expenditure?”
“Can we postpone this expenditure?” ‘’can we place this amount the retirement fund?” The
government employees get pension not from the government resources but it is deducted from
their salary every month regularly. This amount, after lapse of time, becomes big corpus,
because of compounding of interest. Retire mint pension comes from the interest earned on
this amount.
This we do understand. But we do not feel it. The government deducts the amount from the
salary compulsorily. We do not show such compulsion on our earning. This is the most
important hurdle in the retirement plan. Thus, the principle barrier in the retirement is the
mindset & absence of firm commitment. If we firmly decide, we can certainly plan & pass a
fruitful retired life. Let us see what retirement is planning in the subsequent chapters.
4. Retirement & wealth planning;
On the one hand, we hear ‘’money means everything. Without money, we cannot do anything
only the rich has worth in this word’’, & on the other, we hear extreme views like, “money is the
cause of all misery. There is no meaning in money. While going to the eternal abode, who have
to leave everything here only, ‘’we observe both kinds of people in these society. Every
individual has his own world. His style of thinking & living style is different. Normally, it is very
difficult to achieve unanimity on the balanced & ideal lifestyle, because everyone has different
views. Hence, it will not be appropriate to considered only the financial aspects while planning
for retirement. It is a comprehensive view about the lifestyle is taken everyone has to undertake
planning in one way or the other, directly or indirectly.
1. Emotional planning 5. Family planning
2. Planning of our relation 6. Social planning
3’ heath planning 7.Spiritual planning
4. Career planning
 18

Everyone has to control & plan his /her sentiments. A number of factors like social environment
during childhood, surrounding back ground at school & at home, members in the family,
traditional customs, etc., has a deep impact on one’s personality. Through this, his nature &
personality get cultivated. As the child grows, he starts understanding the meaning & the
importance of the relations. He starts understanding the facets of relations. Unknowingly, the
facet of nature of the members of the family & the society are revealed. Slowly, the education
gets over & the career starts. One gets married; better half comes in the family. The whole life
gets a new turn. He gets an opportunity to mould his own family. Young one’s come in the
family. New relations get developed. Slowly, his identity in the society emerges. Unknowingly,
he is exposed to social & national responsibility. At this time, his faith on God or allied issues
develops. He starts gathering experiences. Through all these, every one formulates his or her
foundation about living. With the comprehensive development of life, there is lots of running
here & there for marinating the family. During these days, he has to take care of family as well
as own health. Automatically, an understanding about which are the likely illnesses against
which one has to guard, which are the good & bad things for one’s health, which things one
should avoid, etc. develops. Throughout the lifetime, the financial matters are very much
important. Everyone desires that there should be financial stability & rightly, it is so essential.
Let anybody say whatever he wants to say. The fact remains that for living, one needs money all
the time. Although money is not the end in itself, it is, no doubt, an instrument (means) to
achieve sound & successful life. Hence, financial planning is the basic foundation of all other
planning stated earlier. If the financial planning is on sound footing, one can spend the life full of
employment. This is the ground reality. Right from the childhood, the family’s financial position
creates some impact on each of us. We know our financial standing.

General skeleton for the creation of retirement fund

New pension system
Financial assets----------------- postal scheme
Stock market
Mutual fund
Public provident fund
Bauve company deposit
Government securities/bonds
Share market

Mutual fund
 19

Commodity market
Financial protection-------------- life insurance
Personal accident insurance
Health insurance
General insurance

Retirement
Fund Gold
House
Flat
Agricultural land
Property & asset---------------- Valuable picture, arts, etc

In retirement planning, we will be mainly discussing about the financial planning. This is because
if we have a sound financial position, we can comfortably undertake other planning in life. This
is very true that while running after money, we should lose the balance in life & that we have to
take due care for the same. At times, it is so happens that men run after money so desperately
that they do not care for their own as well as the family health. They earn & save quite a sizable
amount of money & assets till retirement & then a chain of illness starts after retirement
.whatever they have earned & saved is spent on medical treatment, because of gross neglect of
physique prior to retirement. The physique starts taking revenge. For medical care, heavy
amount is spent. This means neither one has enjoyed his life nor after retirement there is any
physical fitness to enjoy. Hence, it is very essential that one has to consciously ensure balance of
health & wealth while enjoying of life. There is no alternative for this. A man of 40 at doctor is a
fool, meaning there by that at 40 years of age, one must know how much time to be given to
each activity, when to agree & when to disagree. Ultimately, one has his own life, time and
money & he has right to utilize it, in this own way.
How money is earned:
1. Through work----either through employment or profession or business
2. Through saving and avoiding wasteful expenditure
3. Tax saving
4. Through return on investment (financial/ other assets)
5. Though borrowing & loans
 20

6. Reverse mortgage
7. Government aid.
We come across three types of people:
 The first type of people leave merrily leaving everything go the almightily
 The second type of people consistently & achieve their targets
 The third’’ ‘’ ‘’ work up to sometime & then they leave the work have way, leaving it to the
destiny.
We largely come across with the third type of people. After a particular age, these men develop
negative thinking. They blame the destiny, they carry a feeling that they will not be able to do it
& the negative thinking becomes a habit. They blame the planning & cultivate their mindset,
saying that man proposes the God disposes.
One has to decide whether the retirement planning is difficult science or an art, which can be
cultivated easily. But, then it is essential that in order to enjoy the life, implementation of the
retirement planning is a vital need. In a sense, retirement planning is a wealth planning. We
earn wealth through different means. Let us take an example of a very simple man. This guy is a
poor fellow from a general category who earns Rs.100 lakhs per day. If we assume his average
life of 65 years &exclude 20 years of childhood & education, he earns in his life span assume of
45 years *Rs. 100 lakhs per day *365 =Rs. 1,645, 500 lakhs. He earns & spends all.
In a sense, he has earned Rs & also spent of Rs. The resultant is a big 0 (zero) because of the
absence of planning. Everyone should remember that every Rs earned has already found a way
out. Therefore, financial planning means that the income earned should be spent skillfully in a
planned manner i. e, pre decide priories.
Everyone has some planned priorities in mind. They are generally the same, ex. Purchase of car,
house, children’s education, marriage, delivery, kid’s professions, tours, entertainment &
hobbies, parent’s responsibility, surgeries & medical expenses. Generally, for these entire
expenses, one has to plan. However, many times, people start collecting money when the need
arises & therefore, there is a mess, & one has to run after friends, relatives, to banks for raising
loans against gold or on house property & at times, to go to the money- lender. In the end, he
lands in difficulties. If a careful thought is given, everyone at the age of 25 to 30 knows it & can
estimate it. Purchase of car, marriage, our house property, deciding the age of retirement can
be marginally altered. But, broadly, one can estimate about all the above avenues of expenses.
If we jot down all those items of future expenditure and put estimated values against each item
& the time span available to collect it that much amount can be written down on a piece of
 21

paper. We usually come across families wherein a female child is born. They start keeping aside
in fixed deposit every year some amount or purchasing some gold for making a provision as a
part of planning for the marriage. If we account for our future needs & the probable amount
required for the same, our current earning & the time at our disposal to reach the targeted
figure, we can comfortably under take financial planning. The basic difficulty is that we do not
think about it at all. We never think of tomorrow.
Creation of wealth is a hidden target of every one. As an individual, we are living with all
sentiments. We live in different positions such as somebody’s son, somebody’s husband, some
body’s father and somebody’s friend. . At the same time, we live as a money making machine.
With the use of our education, skills & equipment at our disposal, we live for the creation of the
wealth for the family members for which we put in hard efforts. This is a ground reality & there is
nothing wrong in it. The only need is that of proper planning & our capability & the wealth. In
today’s modern life, there are number of opportunities for the creation of wealth. Due to technical
advancement in the country & abroad, there is emergence of new class of new rich. In good old
days, there were only doctors, engineers, advocates, business men & industrialists, who were rich
but now the earrings of the common man are also sizeable. Now tall dreams are within reach of
the newly emerged common man. Air travel and overseas tour have now become common, new
avenues tour have now become common. New avenues for development are now open from the
village to the urban towns. Number of ways are now open to identify own capabilities & to convert
it to creation of wealth. If you have courage, no one can come in the way of your going ahead.
In today’s times, earning money & creation of wealth is not at all difficult thing. To securely hold
the wealth; to use it appropriately for future has become a difficult task. One must bear in mind
that wealth planning is the biggest challenge of the 21st century. If you look 30 years back, you
will realize, people spending the whole life in the employment &, at the end of it, were able to
build or buy a house. Owning a four wheeler & foreign tours was not within the reach of the
then common man. Today’s youth of 25 years earns thousands of Rs. The youngsters are getting
fabulous salary at the initial stage, double than that of their father’s salary at the time of
retirement. Even before one enters in 30s, he/she steps in town houses & uses own four-
wheeler. They have bank accounts in 3-4 banks & also keep 5-6 credit/debit cards in their
pockets. We should understand the change in the nation’s economy & the change that is taking
place in the society. Today, women are working in all fields with equal competence. In a number
of houses, both husband & wife are earning. In good old day, salary rise on promotion or the
increment was very meager. Today, in three to four years’ time, the salary gets doubled. In the
 22

past, after passing out from the college, we never used to visit the college. However, in the
present day, the thrust is on getting academic degrees as well as sharpening & improving our
skills. Really, there is a very different time we are passing through. We are living in a society
where there are a number of opportunities & abundance of wealth.
At the same time, we have been entrapped in a number of attractions, fierce competition & the
speed of life. The number of avenues for spending our money is more than the number avenues
for earning money. In older times; we used to fear raising loans. Today, if you just think of
raising a loan, a number of bank official call upon you to provide the loan. While travelling
through the roads, the roadside hoardings keep tempting you to buy. It is interesting to observe
that on the TV, the advertisements occupy more time than the actual programmed. We have
been surrounded by a number of unnecessary wants & desires. There are houses where there
are number of four- & two- wheelers, TVs, etc. Everyone has a mobile phone. Today, we are
buying number of things without taking in to account their value, the utility & then throw these
things in the dump. It is very difficult to find out how many people really make the optimum use
of their purchases. Apart from the wealth, we have been surrounded by those things of
enjoyment. At the young age, when sizeable amount of money comes in their hands, they get
confused. They do not know how to spend, how to plan, they start spending & in vesting
without much thinking. (Of course, there may be some honorable expectations). Interestingly,
today there is a misconception that a costly thing must be the best. Hence, there is a fashion of
buying costly goods. Well, the money is yours &, hence, there is no need to think of or listen to
anyone else. Elders in the family do try to give right advice but after sometime, they too try to
keep mum, under the cover of globalization, multinational companies are attracting the use to
the glamorous market. They are forcing them change their lifestyle.
We cannot keep quite blaming the time. We should speak, discuss, guide & learn the concept of
financial planning. We should know that the wealth is not only to be created but also to be
stored carefully. Often some people take pride & enjoy in displaying their wealth to the others
for which they spend heavily. In fact, there is no need of such exhibition, because their
behavior, body language & lifestyle speak about the financial strength unknowingly. A number
of people do not realize it. Then comes the comparison, competition & in the process, they raise
loans & continue to buy things & in the end, lose their money. They do not realize that we are
being driven by the false ideas of status & reputation.
One has to strive hard to earn & securely store the Godly wealth earned. For these purpose, one
has to resort to financial planning. In financial planning, the Wiseman should accord priority for
 23

retirement planning as it is the last & important need. Hence, retirement planning should be
given preference in the financial planning. If we pay attention to the retirement planning at the
start of our career; we get ample time to save a sizeable amount. At the same time, this saving
provides you a mental support. At the end of the life, we need to beg for money from anyone
else. We have made adequate provisions for the post retirement life until death gives us
confidence & support to spend peaceful & satisfactory life.
There are no obstacles/barriers if we accord priority for retirement planning. We do not mean
things or number of properties. The wealth should be without any mortgage charge on it.
Otherwise, one will have a long list of wealth/ assets &/ at the same time a charge for higher
amount on it. Everybody should remember that if one undertakes retirement planning &
financial planning hand in hand, then successful life is not far off.
Ten Mantras for the creation of wealth
1. Invest an amount equivalent to six fold of your monthly earning as an Emergency Fund
2. Every month, invest at least 15% to 20% of your income
3. Insure your life at least –ten – twelve- fold of your annual income. Do not invest in insurance.
But buy term life insurance plans. Find net alternative avenues for invest.
4. Obtain Medical Insurance policy equivalent to twice the amount of the costliest surgery. (Say,
by pass, kidney transplant etc.)
5. Take care to see that at least 15% to 20% your investment is liquid & will be available at the
shortest possible time.
6. Save taxes. Achieve maximum tax saving & for that resort to invest
7. Try to reduce your borrowings. Take care to see that your borrowings are not more than 50%
of your assets at any time
8. Take care that your monthly loan installments (EMIS) are not more than 40% of your monthly
income
9. Keep evaluating your assets at pre decided intervals
10. Avail the benefit of the central Government’s National Pension Scheme & is self reliant
during retired life.
5. Steps in Retirement planning
After knowing the need & the importance of retirement planning, let us now learn about the
various steps in retirement planning. Irrespective of our age category, we can decide the steps
in retirement planning. For this purpose, let us understand the differences in wealth & earning.
Every month or year what we receive form business/ profession/ employment is our earning.
 24

Our wealth comprises of immovable (fixed) assets & moveable assets. Our wealth means the
residual portion of wealth after deducting the borrowings thereon. A number of times the list of
our assets is long but, at the same time, there are charges on it. Our wealth means, our fixed
assets & investment in banks, other deposits, insurance (paid amount) & our receivables minus
the charge outstanding on it. Assets without any borrowing on it are a sign of successful
financial planning. Net worth means assets without any extra charges on them. Our
monthly/year earrings add to the wealth/ assets. But one must always remember that earning is
not wealth. Wealth creation is a means to achieve the financial targets set out in the life. Hence;
one should not merely think of earnings from employment/ business/ profession but, at the
same time, there should be a long- term target of creation of wealth. Wealth means all those
valuable things owned by you, e. g. postal savings, house, vehicle, gold, land & property,
computer, camera, TV e.g. etc. The value of these things (barring land & property, flats, gold,
etc.) decreases as the time passes by. While creating asset, we should keep an eye on the return
on these assets also.
While carrying out retirement planning, we should bear in mind the following points:
1. Age of retirement: first of all, we will have to decide at what age we are going to retire.
Normally, we retire at the age of 58 or 60 years. However, in today’s changed lifestyle, we can
retire slightly earlier, say at the age of 50 or 55 years. At the same time, we can marginally
increase this retire mint age to 65 years. This retirement age changes from person to person.
This is to be decided by an individual. One has to account for his career, current financial
standing, borrowings, if any, & other responsibilities, while deciding the age of retirement one
has also to account for his hobbies/ likings & the state of health. At times, if so happens that one
gets employed, occupied, in an activity, which is not clear to him/her &, in such a case, he/she
thinks to possess activity/occupation of his/her choice post refinement.
We come across several highly placed officials after retirement that gets them engaged in
education field or social work. Even some persons start a business enterprise of small- scale
unit. While deciding the age of retirement, current financial standing assumes greater
importance. Hence, you decide at what age you want to retire. However, while deciding the age
of retirement, also keep in mind that till you are alive, you will be financially stable. Always try
to balance your income & expenditure. Really speaking, when to retire is difficult to answer but
it is wise to decide it earlier. In real life, if there is a slight/marginal change in the retirement
age, it does not matter much.
Eight questions to answer in retirement planning
 25

1. Exactly when do you want to retire?

2. How much retirement fund will be required to be collected for retirement?
3. How will you get fixed monthly income after retirement?
4. What will be the impact of inflation after retirement?
5. What will be probable medical expenditure after retirement?
6. What you want to do after retirement?
7. Where are you going to settle after retirement?
8. Will the retirement suffices till you are alive?
2. Retirement fund It is difficult to decide the quantum of retirement needed individuals as the
amount differs from person to person. The amount changes per individual. This can be thought
of intwo ways. In the first method of thinking, one has to decide on the amount which he wants
to have with him till he is alive & in the second method of thinking, one has to decide how much
fixed amount one will require every month. While deciding the quantum of retirement fund,
one has to account for the lifestyle, his expenditures, health status & the other responsibilities.
If we decided to pass as age life after retirement, then we may not require sizeable amount of
funds. But, it is certain that if we decide to enjoy the retired life, then we will definitely require
sizeable amount of retirement fund. To decide the quantum of retirement fund, there are two
systems:
A. Perennial Income System: in this system, it considered that we should continue to get our
present income till we are alive. Of Course, one has to account for the impact of inflation. In this
perennial income system, retirement fund is to be created is such a manner that you will get
monthly interest income, which is equivalent to your current monthly income. In this system,
there is no consideration given for the increased expenditure & likely price like & to that extent,
the system deficient, it has limited utility.
B. perennial, expenditure system: this is the most suitable method to decide the quantum of
retirement fund. In this method, we account for our expenditure at the time of retirement & the
proposed expenditure. Accounting for the current expenditure, you can estimate the probable
expenditure at the time of retirement. Our average annual expenditure, probable impact of
inflation & deducting the regular job related expenditure. We can arrive at probable
expenditure after retirement. While doing this, also account for the expenditures on your
hobbies, tours & medical expenditure.
What is the exact retirement fund?
 26

A. In this example, let us work out the quantum of retirement fund as per the perennial income
system for Mr. Babu Babe, who is currently 30 year of age. Present age 30 years retirement age
70 years balance period for retirement 40 years expected life expectancy 85 years, current
annual income Rs 2 lakhs, expected annual growth income at the time of retirement Rs 40. 23
lakhs returns on investment 8% p.a., inflation rate 5%, return on invested after accounting for
inflation 3%, retirement fund needed Rs 4.21 lakhs. Monthly savings for retirement fund is Rs
12,059.oo lakhs
B. In this example, let us work out the quantum of retirement fund as per the perennial
expenditure system for Mr. Babu Babe, who is currently 30 years of age, present age 30 years,
retirement age 67 years. Balance period for retirement 37 years, expected life expectancy 83
years, residual life after retirement 16 years, current annual income Rs 1.5 lakhs, expected
annual growth in expenditure 7% p.a. probable expenditure at the time of retirement Rs 18.33
lakhs, return on investment 10%, inflation rate 6% p.a., return on investment after accounting
for inflation 4%, retirement fund needed Rs 6.23 lakhs, monthly savings for retirement fund Rs
13,375.00 lakhs
5. Regular Income after Retirement:-
In our normal working life, receive regular income by way of salary or other income. As we
receive the monthly expenditure easily. The source, through which we are receiving regular
income, gets dried up on retirement & we become panicky. For this purpose, we will have to
find out, in advance, the avenues of investment, which will give us regular income. Regular
income after retirement means inters income from annuity, pension, interest on investment, &
rent on the house/ flat rented out, etc. We will have to decide in advance what sort of regular
income we should have after retirement. Once it is decide, we can plan it accordingly.
6. Retirement medical fund.
Retirement medical fund is primarily required to meet the medical expenses on illness or
surgeries. At this age, physical strength is reduced due to lifetime tireless work, a number of
illness starts coming to surface. Sometime, on emergence basis, surgeries are required to be
performed. For such purposes, sizeable amount is required to be kept ready. On the basis of
planned retirement age, we can fairly assess the amount required for such type of medical
expenditure. Accounting the maximum amount of expenditure required to be put in for any
surgery/ illness at current rates, estimate the probable expenditure that will be required at the
age of planned retirement. For this purpose, account for two- three-fold of current expenditure
as the probable amount (remember, you will also have to take in to account your better half).
 27

You will have to set aside this amount, e.g., today for bypass surgery, Rs 3.00 lakhs is required. If
you are retiring after five years, they will have to set aside a sum of Rs 7 to 8 lakhs as medical
fund.
7. Emergency fund after retirement
You will have to set aside certain amount for tours & occasional expenditure. If there is sudden
death of the better half, one will have to make a provision for some emergency fund to attend
such related expenditure like funeral expenses & post- funeral religious rites. Likewise, for some
small emergences also we need urgent money for which we should make a provision.
8. Post- Retirement settlement
We should also decide about the location where we want to pass our retired life. Many a times,
retired people prefer to settle in a suburb or a nearby village, handing over the present
accommodation to their sons. The main intention is to get healthy environment & peaceful life.
At the same time, the cost of living is also relatively less. This is a positive aspect. Therefore, one
has to decide in advance where he would like to settle after retirement, and once such location
is identified to buy a house there. However, while deciding the place for settlement, you should
take in to account the climate, medical facilities, roads, telephone/ email facility, entertainment
facilities, banks & post offices, etc.
Priorities in investment
Long-term investment targets (20to30 years) retirement planning, retirement medical fund,
foreign tours, pilgrimage travels, religious tours, etc., children’s higher education, marriage,
business housing/ car loan, primary & secondary education of the kids.
Medium term targets (5to 10 years) regular expenditure, life insurance premium, an occasional
expenditure.
Short term targets (1-2 years)
8. post –retirement career:
How will you spend time after retirement is a million dollar question? Normally, the husband
goes for work at 9 a.m. & return at 7 p.m. But after retirement he is all the time at home & he
starts pocking his nose in all sundry matters & makes the life very much embarrassing. This is
the expense of number of people, one who is used to continuous work & is habituated to
account for every minute, gets confused on retirement. They don’t know what to do & how to
kill time, & live. This problem is never solved, you can keep yourself busy bearing in mind your
health & capacity in the areas of your interest. Some people nurture their hobbies. Some people
devote to social work or work for any organization of their choice. Some people start shop or
 28

consultancy or start making same age group people. Everyone should find out a solution to keep
busy after retirement. The career after retirement can be divided into parts:
A. First decade after retirement: In this period, we are quite efficient in working. Your physique
supports you. You can freely move & travel. At such time, it is better to start small business or
social work. During this period, you can undertake long tours, overseas tours, etc.
B. Second decade after retirement: In this period, gradually your physique starts getting
exhausting early. New limitations crop up. Your hearing capacity impairs. Eyesight becomes
weak; you cannot walk for longer distance. This is natural process & we should accept it
mentally. Your target should be to be perfectly physically fit as far as possible ill. You are alive.
At the same time, you should also consider the security of your better half (wife). As the family
members are away, you will have to take extra precautions. It is useful to have men of
confidence at hand for which friendship should be developed with such persons.
8. Wealth planning after retirement
As long as you are alive it is wise and essential to keep the wealth amassed secured & in
possession. You should also pay attention in increasing the wealth. It is essential to ensure that
after your death, the wealth is transferred to your better half. Alternatively, you should make
arrangements & care for your better half & ensure that during her life time, she becomes
financially independent & capable. For this purpose, the best thing is to execute a “WILL”. The
Indian succession Act a complicated one. Hence, it is always better to execute a will. If you don’t
execute a will, it is likely that the wealth distribution can be against your desire. Your sons &
relatives may fight among themselves for the wealth. It may create animosity amongst them. In
such situations, matters go to the court & the court appoints the administrator. No one gets the
hard- earned wealth safely & easily. If you do not want such situation to happen, it is advisable to
execute a will so that you can divide your wealth according to your choice. In that, you can detail
in how much one is to receive; one’s share in the property can be already mentioned. This can
avoid confusion after wards. While executing a will, one should prepare a list of movable &
immovable assets. It should be checked. Make sure that nothing has been left out. Divide the
wealth in clear terms. As far as possible, one type of wealth is given to one person, so that there
will be no problems. A will can be executed on a plain paper in one’s own hand writing. It should
be signed at the bottom of it. There should be two witnesses to it. If possible, you can register
the will. It is not a costly affair. Besides, it can be changed also. Many people think that a part of
their self-earned wealth be spent for the social work. Through the medium of a will, this
provision can be made.
 29

Thus, so far we have seen the steps in retirement planning. These steps give directions, using
this information; one should draw his own steps for retirement planning. For a few steps, in this
exercise may not prove to be useful. One should think of and consider one’s age & the needs
&’if need be, additional steps may be introduced. In today’s life, while considering retirement,
one should be able to chalk out a graph & accordingly these steps have been stated. Maximum
use should be made if it. At the same time, it is essential to review these steps after a definite
period. These points & the retirement plan be re-examined & if need be, appropriate
improvement/modification be made in it. You should attempt that your retirement plan should
comprehensive & clear. In the subsequent chapters, we are going to study the avenues available
for retirement planning.
6. Avenues for retirement planning:
Once we decide on the steps in retirement planning, we will have before us a plan ready for
action. That action plan will comprise of our retirement age, amount require for retirement
fund, career after retirement fund, & place of settlement after retirement, etc. Retirement
planning is an independent part of the total financial planning in our life. Every individual has
few fundamental needs of life. We have seen those needs, which include self marriage, house,
vehicle, children’s education, marriages of the sons &/ or daughters their businesses/
professions, health and medical expenses & life after retirement. For each of these items,
certain huge amount is required. This amount is required at different modes of life. All these
needs don’t come at a time. Those come in phases. We are required to arrange these amounts
at the time of requirements occur. We can estimate the time period when these funds are
required. Keeping in view the time & the need, we should start settings aside these amount. Let
us now take an example. Babu had a baby girl. At about 24 years of age, she is to be married.
For that purpose, estimated amount is Rs 20. 00 lakhs for that purpose, if he invests a sum of Rs
5. 00 lakhs, he will get a sum of Rs 20.00 lakhs at the time of her 24 th birthday. Now, if it
possible? Is there any other alternative? He obtained an insurance policy of 24 years period, for
which he will have to pay the premium amount regularly. If he fails to pay the premium,
naturally, his financial planning for his daughter’s marriage will go haywire. Hence, timely
payment of life insurance premium & to observe the financial discipline is very much essential.
From Babu’s e.g. you will understand that in order to achieve the various financial goals in life,
we can avail of various savings & investment alternatives available. For achieving one financial
goal, we need not resort to one alternative but can use composite alternatives. Let us now
understand various alternatives available. To constitute retirement fund, we should use the
 30

various alternatives very skillfully. There are number of savings & investment alternatives.
Broadly, those can be divided in two parts.
1. Real state
2. Financial assets.
1. Real estate: this is a fixed asset & is in our possession. It includes land, house, flat, etc. so
also it includes gold, old coins, pictures & other valuables. Agricultural land or open plots are a
good investment. The valuables of house property or flat appreciate continuously. The only
point is you should catch the right timing in these assets & also you should have sound timing to
dispose if off.
Many a time, when there is a dire-need & if the house property or land is offered for sale, it
does not fetch the desired price. For investment in these assets, if you borrow from the banks,
you get occasions in income tax. However, at the time of sale, you will have to pay capital gains
tax.
Investment in house property or land is a sound & beneficial investment. Apart from your
residential house, at the opportune time, you should invest in a plot as it is beneficial. Instead of
investing in land & house at one place, it is always beneficial to spread it at different places.
Investment in plot & flat gives you sizeable appreciation beyond our imagination. There are
some mutual funds which invest in the real estate & give benefits to the investor’s one can
invest in such mutual funds. Investment in gold is always attractive. However, when the
investment in gold is used for ornaments, it results in loss. If the investment in gold is in the
form of coins or biscuits, it gives attractive returns. At the same time, no one can invest in gold
through Demat from in various banks. At the same time, investment in valuable things, rare
things, pictures, coins, etc also fetches very good returns. However, for this purpose, one should
have a sound study of such investment & skill required to identify its reliability.
2. Financial Immovable Asset
These assets are in your name only. Many a time, it is in the hands of other institutions. Its
ownership solely rests with you. However, it cannot be used immediately. We have to follow
certain procedures. Then only it comes in our hands in the form of cash. Then we can use it. This
is called saving & investment. Savings mean setting aside certain amount regularly out of our
income. Women in India keep aside some amount from the household budget in the form of
saving. Placing the savings in a specific scheme with the object of getting fair return on it is
called investment. We will have to develop skills for placing our surplus in sound investment
schemes. When the money saved starts generating income on its own, it is called investment.
 31

While investing, we should be able to balance the income as well as security you investment be
made out of sentiments, when sizeable amount is received with lot of attractions like. Dam
duppat’ (doubling the principle), fetching higher amount of return, people invest in such
schemes but ultimately they repent at the end, when they lose their principal amount also. On
several occasions, the amount is invested in such schemes with attractive return schemes &
when they lose everything in the hope of higher returns, no one looks at them. When such an
amount is to be invested, we should obtain information & first-hand knowledge about who are
the promoters of the scheme, have they obtained requisite licenses/permissions from the
concerned government departments, whether it has the necessary approval from the Reserve
Bank of India, etc? For this purpose, interaction with our friends & relatives, professional
investment consultants is very much essential. On several occasions, the agents of the bogus
investment schemes develops pressure from the relatives, make undue hurry for getting the
investment made & once the investment is made, these bogus agents run away, when once the
amount is lost, no one comes to your rescue. The Law & the police cannot help us beyond
certain limit. Instead, it is essential that while investing, you should be cautious. We try to save
the consultants professional fees & lose the principal amount.
The financial liquid assets are created through investment in the following schemes:
a. Investment in post office
1. National Savings Certificates
2. Kisan Vikas Patra
3. Recurring Deposit Scheme
4. Monthly Income Deposit Scheme
5. Senior Citizen Savings Scheme
6. Public Provident Fund
1 .National Savings Certificates: these are issued by the central Government, on which you
receive compounded interest @ 8% P.a. The time period is 6 years & there is no upper limit for
investment. In this investment, income tax concession is available under section 80c upon the
original investment. However, the interest attracts income tax. In this scheme, no prior
encashment is allowed.

2. Kisan Vikas Patra: in this scheme, the principal amount gets doubled within a period of 8
years & seven months. In this scheme also, there is no upper limit for investment. These are
payable to the bearer &, hence, the investor has to keep it securely.
 32

3. Recurring Deposit Scheme: this is a 5 years’ scheme, in which every month an agreed amount
is required to be deposited. After the expiry of the 5 year period, the investor gets interest @
7.5%. There is no income tax benefit, either for the principal or for the interest earned. After
two-and-a half years, you can with draw but there is slight reduction in the return

4. Monthly Income Deposit Scheme: this is a six years’ investment scheme. The maximum
amount one can invest in this scheme is Rs. 4.5 lakhs & two investors can jointly invest Rs. 9.00
lakhs. Monthly interest @ 8% is available & after the agreed period, one gets 5% bonus. There is
no tax benefit. Ex. On the investment of Rs.9.00 lakhs, every month you receive Rs. 6.00 lakhs by
way of interest & at the end of the maturity period, Rs. 9.45 lakhs are receive. In this scheme,
premature with drawl is available only after one year but at the reduced rate of interest.

5. Senior Citizen Savings Scheme: this scheme is for those who have crossed 60 years of age.
Senior citizens can invest up to a maximum of Rs. 15.00 lakhs & the period is 5 years. The
deposit can be renewed. This scheme is also available in the Government Banks. In this scheme,
the return is @ 9% & interest can be received on the monthly, quarterly or half yearly basis.

6. Public Provident Fund: anyone can invest money in this scheme. In this fund, a minimum of
Rs. 500 per year & a maximum of Rs. 1,000,000 can be deposited. This scheme is for a period of
15 years & after maturity, it can be renewed for every 5 years’ period. In this scheme, return is
@ 8% & peculiarity of this scheme is that no charge can be created on it. No one can touch this
investment for any recovery. This is one of the best schemes for retirement planning. It is
suggested that these accounts be opened in the name of every child in the family. The scheme is
beneficial for retirement planning as well as any other long-term planning. In this scheme, the
original amount invested attracts concession under 80c of Income Tax Act. Besides the interest
on the amount is free of income tax, thus, no income tax is applicable under this scheme:

a. Fixed Deposits: investing money for a fixed repayment period in banks or approved companies
is called fixed deposits. In this scheme, the period is fixed & interest rate is also fixed. Interest
can be received every month, quarterly, half yearly. By & large, these deposits are be cured.
There is no Income Tax concession on return on this investment.
b. Deposits placed with private Companies: generally, these deposits are for a period of one to
three years. The interest rate is slightly higher than that offered by the banks for the same
period. These deposits are not as secured as that placed in banks or in government schemes.
However, it is always beneficial to place some investment in reputed companies.
 33

c. Government Securities: Central & State Governments regularly bring out securities in the
market. The minimum investment in the securities is Rs. 50001 lakhs. The period is fixed.
Interest rates are fixed earlier. At the end of maturity period, principal amount & the interest
are refunded. There are attractive tax concessions. This investment is the most secured
investment. Similarly, the Reserve Bank of India also brings some bonds in the market.
d. Investment in Stock Market: under this category, investment can be made in shares or in
debentures. This is also known as equity & debt. This investment is highly unstable &
fluctuating. Those who have up-to-date knowledge of the dealings in the share market & have
time to undertake continuous market study should go in for this mode of investment. Stock
market is highly volatile. At least, one should have a minimum of two years of study of the stock
market before investing in it. In short, with half knowledge & on tips from anybody, one should
not invest in stock market & if one does so most of the time, he is put to loss. Those who have
declared bankruptcy after investing in stock market can be traced around us.
Of course, there is other side of it. Really speaking, investing in the share market is considered
to be a long-term investment. If the investment is for a period of 10 years it gives maximum
return. If we trace the journey of the stock market sense. ex, we find that those who had
invested Rs. 1000 lakhs in the year 1991 in the share market, after 15 years, i.e. in 2006; the
investment was increased to Rs. 12,411 lakhs. Those who invested Rs. 1000 lakhs in 1996 have
received Rs. 4427 lakhs in 2006. Thus, if we invest in stock market for a longer period, you earn
fabulous return, but this requires patience & the mid set not to be panicky from any news from
the stock market, those who have sufficient time for study & are willing to take risk should only
try this avenue for investment. Comparatively, debt market is considered to be more secured.
At the same time, instead of saving in one company, you can invest in number of company &
should have diversified portfolio so that risk is minimized.
e. Mutual Fund: those who do not have knowledge of stock market & very limited amount are
therefore investment & at the same time, there is limited risk-taking ability, they can avail of
this investment avenue, simultaneously, availing relatively better yield on their investment. This
is the middle way. Small investors come together & create a fund. Experts in share market
invest this collected amount in the share market & return earned, after apportioning the
administrative costs, is distributed amongst all the small investors. This system of investment is
known as Mutual Fund. This is an alternative scheme with little risk to earn benefits of the share
market. Minimum amount of investment is Rs.500 lakhs. There are a number of types of mutual
funds; ex. equity fund, debt fund, balance fund, sect oral fund, money market fund, etc… A
 34

number of mutual funds also run fixed monthly income scheme. Of course, one has to study the
mutual funds. Who is the fund manager, his capacity, experience, skill, etc… needs to be closely
watched. Even while investing in mutual funds, one has to remember that instead of investing in
one mutual fund, by investing in more than one mutual fund, the risk is divided. You should
remember that tax concession is available for the return one gets from the mutual funds.
Therefore, the return is more than the investment in fixed deposits. However, no one can give
guarantee about it. Results in the past cannot be the future operations. This is also written in
every advertisement of the mutual in small fonts. Therefore, those who are willing to take some
risk should invest in mutual funds. It is also suggested that there should be periodical review of
these investments.
f. Non-Banking: Chain Scheme of Investment: a number of non-banking companies & chain
investment schemes are available in the investment market. But these schemes are exposed to
very high risk. Some credit societies also appeal for investment. There is need to check the
credibility of such companies. Attractive advertisement, influential agents & post-environment
influences thousands of people & they invest their self- earned savings & lose it.
g. Mutual fund & the income generated out of it, is given to the investor. However, there is a risk
in the investment. It has been observed that, sometimes, some companies charge heavily and
deduct the insurance agent’s commission from the gross return on the investment. Hence,
unless the ULIP scheme is studied thoroughly. One should not balance in the mutual fund
separately.
So far, we have seen the various alternatives available for financial planning for the post
retirement. Everyone should plan the investment, keeping in view his age, financial condition,
own plan of retirement & standard of living. By making a fair combination of various schemes
one should try to make his retirement plan more & more secure & comprehensive. In the year
2000, the Central Government had constituted a pension Reforms Committee. This committee is
also known as OASIS (Old Age Income & Social Security) committee. On the recommendations of
the committee, the Central Government has established PFRDA Pension Fund Regulatory &
Development Authority in the year 2003. The PFRDA exercises control over the working of the
companies engaged in the India Retirement Fund Planning. The way in which Reserve Bank of
India regulates the functioning of the Banking Sector, TRAI regulates Telecom Sector, SEBI
regulates the capital Market, IRDA regulates the insurance sector. After the year 2000, when the
insurance sector was opened for the new insurance companies there are a number of insurance
companies, which have entered in the market with a variety of products. At the same time,
 35

bearing in the mind, the interest of the retires from various sectors the PFRDA has, with effect
from 1st April, 2009, introduced a new pension scheme, details of which will be discussed in the
next chapter.
7. Central Government’s National Pension Scheme (N.P.S): before we start studying the new
pension system (NPS) of the PFRDA. Let us first study the pension scheme introduced by
insurance companies. These schemes are known as “Annuity (Pension) scheme.” these are two
types:
1. Immediate Annuity Scheme:- in this scheme, on investing a specific amount of premium, you
start getting pension immediately
2. Deferred Annuity Scheme: in this deferred pension scheme, we can decide the age of
retirement. Till that age of retirement, we have to pay regularly the premium. During this
period, you also get the insurance cover. On attainment of the age of retirement, the amount
collected so far is invested together with the bonus eligible on it in the Annuity Pension Scheme.
And you start getting pension at the then prevailing rates. Once the pension starts
automatically, the insurance cover is withdrawn. You can decide the periodically at which you
want the pension-whether monthly/ quarterly/ half-yearly or yearly.
From the Annuity pension scheme, there are following alternative to receive the pension. The
choice of the alternative rests with the investor. Alternatives of the pension are as below:
a. Pension till the insured person is alive
b. Pension for fixed period of 5, 10, 15 & 20 years & there after till the insured is alive. In this
scheme, even if the, insured person dies, the heirs continue to get the pension till the pre
decided period & if the investor remains alive, even after the pre-decided period, he also
continues to get the pension till he is alive.
c. Joint pension: pension in given till the insured is alive. After his death, the spouse gets 50% of
the pension till she is alive
d. Scheme with refund of Pension Fund: in this scheme, the amount of pension fund collected at
the time of commencement of the pension is handed over to the legal heirs after the death of
the insured. It means as long as the insured is alive, he gets the pension & after his death, the
amount of the fund is handed over to the legal heirs. This is a better and more convenient
scheme as it takes care of the insured till he is alive & the pension fund is given to the legal heirs
on his death. In this scheme, the amount of pension is slightly less. However, the amount of
investment is available to the legal heirs.
 36

e. Annually Increasing Life Pension: in this scheme, the insured gets the pension, in which there
is an increase of 3% every year, till the insured survives. The pensioner has to decide six months
in advance of retirement about one option of his choice for receiving the pension.
8. Skeletal of Individual Retirement Planning: in the previous chapters, we have obtained
information about various retirement plans from various angles. Now, we shall obtain
information to actually use the said information. On the basis of the current age, you should
decide on the various phases of the retirement planning. Accordingly, we can decide the
Retirement Target. For this purpose, the following information is necessary.
a. Age of retirement
b. Retirement Fund
c. Medical fund
d. Reserve Fund
e. Place of settlement after Retirement
f. Career after Retirement & Income Source
The above tips have already been explained in the previous chapter.
a. Age Group; 20-30 years- those who are in their twenties or thirties will perhaps find it difficult
to decide these targets clearly. A youth of 25 years of age will not be able to decide the place of
settlement after the retirement or even the target relating to career after retirement & income
sources will also be irrelevant for him. However, he will be able to decide broadly his retirement
age, how much income he will require every month after retirement. Twenty to Thirty years of
age is the ideal age for retirement planning? It will be most beneficial & wise to participate in
the New Pension Scheme & save maximum possible amount at this age. If there are no major
financial responsibilities, the one should save 60% of his income in this pension scheme &
conveniently forget it. He should only remember that he is to get sizeable amount on
completing the age of 60 years. This confidence will provide a tremendous support for living.
Simultaneously, term insurance plans be also taken during this age because during this period,
the insurance premium is very low. Besides, as it is possible to obtain long-term polices,
automatically, the insurance premium is very less. Lots of attractions are dragging the youth at
this age. With conviction & commitment that this investment is for the bright & satisfactory
retirement will have to be made. At the same time, for the post-retirement life, Medical Fund,
some amount will have to be set aside. The amount so saved is invested in deposited scheme,
where interest at compound rate is available.
 37

Everyone should consider this as a self-imposed Retirement Tax to have an enjoyable & self-
reliant retired life. At the same time, it will help you to work with more enthusiasm in your
present life.
In case you want to settle at a new place, then please check the following seven points:
1. Climate- please checks whether the climate at the new place of settlement is suitable to your
health or not. Particularly check the summer & winter climates
2. Cost of living- whether the cost of living at the new place of settlement is higher or lower than
that of your present residence. Also please assess whether it will not be increasing at a faster
pace
3. Medical Facilities- please check the proximity to the medical shop, hospitals, etc. if you are
already sick, then it is essential to ensure that the required medical infrastructure is readily
available there
4. Banks, Post offices, Internet, Mobile, ATM, facilities, etc- in today’s dynamic life, proximity to
banks, post offices, internet, mobile shops, etc is helpful to attend to the financial transactions &
for easier communication
5. Pollution & traffic- please check the new locality’s air & sound pollution; perhaps, its present
level may be harmful to you. Also check that there is no heavy traffic in the locality & you can
easily attend to your normal market related work
6. Career after retirement- please explore the possibility of opportunity for making post
retirement career in the vicinity, so that you can utilize your time there as well as earn some
income
7. Entertainment opportunities- also find out whether there are any entertainment
opportunities like ground, theatres, gardens, cinema, theatres, clubs, etc according to the life
style & liking.
b. Age group; 30-40 years- those who are in the age group of 30 to 40 years should accord
priority to retirement planning. Really speaking, this is the stage in life where one settles in life.
One gets married; kids grow, strive for settling in the job, one is full with energy & have
tremendous work capability that entire one is trying to give maximum scope to one’s abilities to
convert one’s efforts into higher income & success. Generally, it is observed that those who are
in this age group of 30 to 40 years are putting in hard work. An individual may be working in any
field but his capabilities are really tested in this age group. During this period, one has to
shoulder family responsibilities. One has to keep an eye on it. For maintaining the family
constantly, money is required. Hence, this is the life span when one has to essentially start
 38

retirement planning. Remember, you cannot afford any more delay. At times, you have to set
aside some of your necessities & start investing for retirement planning. Really, it is a crucial
balancing act as, on the one hand, there are more pressing demands from the family &, on the
other, you have to save for the retirement planning. On such occasions, think of your life after
retirement. If you do not want it to be miserable, then there is no attractive for retirement
planning. One thing is certain, if you make a resolve & take a stock of your life style & the family
expenditure, cutting the unnecessary expenditure. You can save the targeted amount. The only
thing essential is your firm commitment to Retirement Planning. Decide your age of retirement
& the quantum of retirement fund. You should tap investments in pension scheme, land, plot,
house/flat, gold, etc. at the same time, if you are willing to take some risk, you may tap
investment in mutual fund/ stock market on the long-term basis. Life insurance is essential in
this age group. Insurance should not be considered as expenditure but should be looked upon
as a provision for any toward eventuality. You may also try other sources of investment. In this
age group, many a times, there are occasions of receiving lump sum money unexpectedly, ex.
Bonus, over time, gift from the ancestors, sales of agricultural land etc. such amount be invested
with firm determination in the New Pension Scheme. With firm conviction, temporary
temptations are required to be set aside. At the same time, try to learn some new skills for
starting a new career after the retirement. In a way, it is also an investment for retirement
Planning. In the past after completing the education, one used to join a job & used to remain in
the same job till retirement. But, now in the changed circumstances, constant education &
professional training has become necessary. Identify a field of your choice & if possible, please
complete a short-duration course for that. Cultivate the reading habit & continue reading new
things. If you are travelling as a part of your existing job/ profession, please keep an eye on any
new remunerative activity, which you came across & assess its adoption for your post-
retirement career.
Remember, you have to wisely use the time of this age span on which post-retired life is
dependent. This time, management in the age group of 30-40 years is a vital investment for
future retired life. However, while doing so, please do not neglect your health. Pay proper
attention to your diet, exercise & work culture & at the same time, your daily rest requirements.
Some people in the pursuit of career neglect their health & in the old age, they became victims
of some fierce health problems. At any cost, this has to be avoided.
c. Age group; 40-50 years- if you have not thought of Retirement Planning up to this age, it is a
very serious matter. If immediate & urgent attention is not paid now, you may have to repent.
 39

Without discussing anything & spending time, you should now prepare a Retirement plan. Now,
remember, hardly 15-20 years are in your hands. In this age, one has a settled life. You might
have completed 15-20 years in your job or business/ profession. The enthusiasm of the young
age is on the down trend (not completely exhausted), kids are now grown ups, their education
& marriages are the responsibilities. Many of times, one has to shoulder responsibilities of
parents. They are in the 70s/80s. Their medical expenditure is also quite sizeable. During this
age group, there is a silent slow speed in our activity. You are tired & bored of doing the same
routine work again & again.
Even if it is so, one should not neglect the retirement planning has not been resorted to earlier,
then accord your top most priority to it. If needed; increase your age of retirement. Assess
whether you can increase your income, can you put the available time for better one & can you
enter in to a part-time career after retirement, if there is no life insurance as well health
insurance cover obtained so far & then obtain it urgently. Before you reach the age of 45 years,
you can get the health insurance limit increased. Maximum investment is made for spouse &
self. In this age, no greater risk is accepted. However, one should have calculated risk.
Remember that your five-day Cricket Test Match is now over &you are now playing a one-day
cricket Match. Every rupee should be spent with due care & planning. Money saved will be
useful for retirement planning. At this age, while investing, you should not become sentimental.
At times, there is a greater risk of getting deceived in financial matters in this age group.
Age group; 50-60 years-if you are neglected your retirement till this period, even the possibility
of the God Coming to your rescue is very dream. You have neglected the most important need
of the life. But instead of repenting, even if you take few fast steps you can achieve a few
retirement targets. This is like a chess game of 20 moves or like 20-20 cricket match. First of all,
obtain health insurance. For obtaining this insurance, you will have to face some medical
examinations, but do not waste time. At this age, getting life insurance cover is very difficult. If
you are just in your 50s, it is worth trying to have life insurance cover. Even if the insurance
premium is more, do obtain it. Try to defer your retirement age. Explore the possibility of 10
years’ career from here on wards. Even if you get little less money in this new career, it will do.
Develop skills required for new career. Do not take risk while investing. After consulting
experienced investment consultants & that too after cross-checking their advice from one or
two more sources, invest your money. Decide the retirement age & accord your top most
priority for the creation of the retirement fund. For your ones’/ daughters; education or career,
take education loan, facility offered by banks. If you have fixed assets like land or house
 40

property, dispose it off for a good value & created retirement fund & obtain health insurance
cover. At the same time, take the benefit of the Reverse Mortgage scheme. If possible, consider
setting in a small town, where the cost of living will be less. If you’re financial condition is
sufficiently strong, resort to sound investment. However, at this age, do not take any risk in
investment. Take at most care of your health, because post-retirement medical expenditure
requirement is always more. At this, do not become sentimental regarding your relatives, your
sons/ daughters. Give preference to your retired life. Many a times, at this age of retirement,
you reserve a fabulous amount as terminal benefit your sons & relatives are quite helpful of
seeking financial assistance from you. Sometime, out of love you might money to them. Then it
is very difficult to recover it from them. May, it is impossible to recover it your physical
capability is impaired; you cannot argue or follow up beyond ascertain limit & also no action is
possible. Hence, to all these who expected financial support from you, frankly & clearly tell
them that as long as you are alive, the amount will be within your control only. So far we have
seen how to prepare a retirement plan in various age groups. Everyone can prepare this
retirement plan, taking in to account his needs, financial status, and age and will be able to
prepare an action plan. Every after the preparation of an action plan, for its implementation, a
few important things detailed below will have to be borne in mind

3. double income;-

In a family when both the members of the family, husband & wife, are earning, the retirement
planning is convenient & beneficial. Earning of one of them can be set aside for retirement
planning. As an insult, a site able retirement fund creation is possible in this saving, both are
participating. Many a times, where double earning is not properly utilized, extravagant
expenditure is incurred. Double earning may be in another from also, e.g. Income derived from
other than employment or profession or business income from agriculture, rent received from
property, honorary received, etc. this income can be called second or third earning also, such
earning can best be effetely used for retirement planning. Preparation of own retired life
planning for it accordingly is an example excellent lifestyle everyone expects that the end should
be sweet. However, for that purpose, at every stage of life, one has to give right direction &
interestingly, it is in your reach only

9 Implementing individual retirement plan;

To formulating Indi, dual retirement plan is the most difficult & important askance this plan is
ready; its implementation is the next challenge. To think about retirement is the first step to
 41

discuss it with the family members & in the friend circle, collection of the data is the step to
discuss it with the family members & in the friend circle, collection of the data is the second
step. Studying the self-financial condition & discussing with the professional retirement
consultant & preparation for self-retirement plan is the third step. Investing according to the
plan & to implement plan meticulously is the fourth step. If you work on the first three steps
quite extensively and if you do not act on the fourth step or implement it half heartedly, then
the retirement plan would be a failure. Here you should remember that instead of taking action
is important & wise step in the implementation of individual retirement plan.
While implementing the retirement plan primarily, following difficulties are encountered:
1. Sentimental problem
2. financial problem
3. relationship
4. absence of retirement awareness
5. uncaring attitude
6. absence of commitment
7. over-confidence & over-discussions
8. wrong counseling
1. Sentimental problem-there is one notion in the security that God is there to look after
everyone & he has given me birth, he will take care of me till I am alive. This may be true. But
one should think of how much trouble you are going to give to the God. At times, a peculiar
feeling is created. Retirement plan is mine thinking about it all the time means I am selfish. It is a
right thing to think of self all the time about own happiness instead of our kids, their future,
their likes & dislikes, instruments of employment. How far is it? Wise to think of retired life
instead of enjoying during the current young age? These waves move around you for
sometimes, these are of temporary nature. Going beyond such thoughts consciously, you should
concentrate on your retirement plan. Once you go beyond the sentiments, the hard real truth
comes to the surface & tells you that you cannot pretend to be wealthy all the time. You hard
earned money, which you have saved is the only source through which you can take proper care
of yourself.
Remember while undertaking planning & its execution, you should not play foul to the
sentimental problems any time. As long as you are alive, taking own care is not an act of
selfishness.
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2. Financial problem-everyone has to face financial problems in the day-to-day life. He may be
multimillionaire or an ordinary laborer.
Remember, family problems are never ending. It is a wrong notion that, for retirement planning,
one should be rich. The real secret of retirement planning is that one should set aside certain
targeted amount of money from his regular income first. We cannot avoid certain things like
payment of service tax while availing certain services. There is no other option but to pay it. In the
same manner, there is need to impose retirement tax on your own income & to deposit it
compulsorily in the retirement fund. If this is religiously done, then there will be no difficulty in
collecting the retirement fund. If you are getting a take home salary of Rs. 10000 lakhs then tell
your family members that you get Rs. 8000 lakhs per month & credit Rs. 2000 lakhs in the
retirement fund. In this way, the family will adjust their monthly expenditure with Rs. 8000 lakhs &
your retirement fund will start growing. Without making a hue & cry about the difficulties, in a
disciplined manner, regular investments can be made.
3. Relationships: relatives mean our parents, spouse, kids, brothers, sisters & other near
relatives with whom we spend our daily life. We hand for them. Relations with the relatives are
required to be handled very carefully. If there is a light mistake, it leads to unprecedented
situations. We have to over duties towards our parents, wife & kids. However, with other
relatives, one should not have any financial transaction under any pressure-Chance of getting
deceived are more in such cases. We cannot take stringent measures for recovery because of
the relations. In the 50s, you should accord priority to your son’s education & retirement
planning. For higher education of sons, it is suggested that you should resort to education loan
as it inculcates sense of responsibility in children also.
Causes failure of retirement planning:
1. Lack of investment- even after deciding the age of retirement & the setting of target of
retirement fund, if there is no investment made in it; naturally it is bound to fail. It means you
constructed a road but you did not walk on it. Keeping aside all the temptations, you should
invest regularly.
2. Indiscipline in investment-you prepared a retirement plan & also invested some amount. But
while doing so, if the investments are not according to your own plan, naturally you will not get
the targeted result. You made out a plan & for the first five to ten years, you did not invest &
then your plan is bound to fail.
3. Planning is the sentimental waves- for better retired life we have to control the temporary
sentimental situations & invest in the retirement fund meticulously.
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4. Wrong consultations- at the formulation stage, if you have received an incorrect advice, the
plan is bound to fail. Therefore, it is suggested that before finalizing the retirement plan, it
should be discussed with 4-5 people from different levels. It is also important that you should
discuss about the retirement plan with your wife & make her a participant in this plan

5.Absence of retirement awareness: some people do not have awareness of the fact that one
day they are also going to retire. This is really a serious matter. A number of senior citizens
repent for not planning for the retirement at their young age. Without consciously doing
anything, we passed the days & now we are helpless at this retired age. Even if someone tells
them about retirement planning, do not realize its importance & seriousness. This is social
responsibility.

6.Un caring attitude: many at times, we come across a number of people, who are not at all
caring for their retired life. They carry a feeling. “Let’s see as &when I retire, let us enjoy the
parent. Who is going to see tomorrow?” such thinking is absurd. They have to face a measureable
retired life because of their own deeds. Such as person should visit old- age home at least once.
Then he will realize the importance of the retirement planning. Till then he will not realize the
importance & need for retirement planning.

7. Absence of commitment: this is also a sort of sentimental problem. You understand it but you
do not act on it. The wavering mind does not allow you take a decision. The importance of the
retirement planning is well received but, while acting, you cannot control your mind &
unnecessarily expenditure is incurred on non priority items. Then you feel about it. Really
speaking, this is the challenging situation. The need of hour is to set aside the targeted amount
with firm conviction & commitment. In such situations, please meet a person, who has planned
his retirement well & store your views with him. It will help you to implement your retirement
plan with commitment.

8. Over-confidence & over-discussions: some people are over-confident & as a result, they do not
remain alert. They remain un prepared particularly, those who are having good financial position,
carry an impression that they will not be required to report when retired. They feel that they have
already earned sizably & there is no need to discuss such things. Everyone should remember that
time changes & nothing in this world is statics. No one knows what will happen the next moment.
Difficulties do not come giving advance notices. A wise man always takes care in advance. Some
people keep on discussing endlessly. In the process, there is no decision. They raise un necessary
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doubts on some issues & do not arrive to a concrete decision. “Shall I go in for this investment or
that investment?” in the absence of any decision, there is no action. You have to guard yourself
from such a situation start investing slowly & gradually increase it. This will create confidence &
the investment will grow. Nobody in the world has stated investing in the retirement planning.
Everybody starts from small savings & gradually the growth is achieved in it.

9. Wrong counseling-because of protected discussions, it is likely that you get wrong counseling.
This does not mean that one should not discuss. There should be a limit for discussion. The right
approach would be to discuss with an experienced person, seek clarifications & take a suitable
decision. At times, because of prolonged discussion, unnecessary points emerge. If the person,
with whom you are discussing not serious about the retirement planning, it is likely that the
discussion will be harmful. Many a times, it so happens that as the consultation is costly. We
avoid seeking advice. As a result, we are a victim to wrong advice. The way we approach a
doctor by paying his professional fees for maintaining sound health, in the same manner, we
should not hesitate in paying professional fees to an expert of retirement planning. We do not
pay any fees to the insurance agent, which might, a times, result in purchasing unnecessary &
unless policies from him. Once we purchase a policy, we cannot do anything further. Many
people feel that the insurance agent should pay initial few premiums from out of the
commission he earns on the policy being purchased. Really speaking, this is a wrong notion.
Every insurance agent is also a professional & it will be unethical to claim anything from his just
income. We should cultivate the habit of spending for the right cause. This will ensure good
counseling & may lead to successful retirement planning.
Care to be taken in selecting retirement planner /Agent
If you are going to seek consultation from a retirement/ financial planner for your retirement
planning, please check the following points. Seeking such an advice is a wise proposition. Even if
you are required to pay for his professional charges, you can be saved from various risks & you
stand to benefit because of his professional advice.
Points to be checked
1. His education
2. His license
3. His work experience
4. How long is he in this profession?
5. Whether he listens to you properly & understands your difficulties?
6. Does he have a feeling of oneness?
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7. Is he giving you personal solution?

8. Is he giving you sufficient time?
9. Is he convincing you?
10. Pressurizing you?
11. Can you call him a friend?
12. Is he honest?
13. Will he be giving you after sales service?
14. Does he giving response to your phone, mobile, email?
15. Is he capable of using advanced technology?
Retirement planning is not a difficult process or skillful art work. However, while implementing
the retirement plan at every stage, your commitment & patience are being examined. Firm
commitment, strict financial discipline & regularity are the factors responsible for successful
retirement is the fruit of our own deeds.
We started with what’s retirement planning & we have come up so far up to the implementation
of the retirement plan. While doing this, we have studied the need for retirement planning; it’s
increased importance in today’s life & barriers’ to it. At the same time, we have also studied
how to plan retired life while creating wealth, phases in retirement planning ways for planning.
We have understood the central government’s New pension Scheme. Retirement & its planning
is a very complicated subject from individual to individual, the picture & the action plan will
change. Our span of life is increasing & simultaneously, prices of commodities & medical
expenses too are increasing. Therefore, everybody should view this retirement planning with due
seriousness. In order to have happy, contended & enjoyable retired life, let us create a sizable
retirement fund. Read this book carefully & act on it & make your retired life enjoyable, for
which we wish you good luck.
What will you do on reading this book on retirement planning?
1. Answer the question
2. Plan early
3. Prepare retirement plan
4. Invest regularly
5. Create a huge pension Fund
6. Have your own control on your wealth till you are alive
7. Make the retired life enjoyable
8. Execute a will for your assets’ distribution
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9. Be joyous in your life

10. Wish you a very happy retired life.

There were two friends-sandals &Babu they was living nearby. They had studied in one school &
a college. Age of both was about 25 years. Luckily both got complement same at the time’ that
two in one company & on the same salary. Once Mr. Babu behaves uncle’ who was also
nescient of their bounding, said, oh; boys you are still bashers. You have no much responsibly
start investing for the retirement now onwards’’ sir. Babu have nicely explained the concept of
retirement planning & convinced them. After wards san jay said to subject was sermons & she
was twisting us, we enjoyed the time pass;’’ sonata was serum & she was convinced by the
point move out by Babu have uncle. She started investing Rs. 25,000 lakhs 1- every year in the
nutriment plan, however, she could invest this only from a six-year period, due , up to her age of
30 years. After wards, for one reason or the other, she could not save time was passing by
sandal was convinced about the retirement plan after 10 years by sandal was convinced about
the retirement plan after wards, 10 years & hipper annum till the attainment of 65 years of
age .after 65 years of age, sandal received Rs. 45.23 lakhs. However, at the same time sujeata
received RS.20 lakhs compounded interest at 10% per annum.) it means after investing Rs 7.5
lakhs over 30 years .he received RS. 10.00 lakhs less than sonata. Sonata’s investment of RS1.5
lakhs was invested for a longer time she could get a single amount.