Retirement Planning Service
Retirement Planning Service
Retirement is a stage of life when one is no longer too much occupied with lot of activities be it on personal, social, or income generation. A person in this stage lives with the reputation, social status, and income accumulated in the past. Typically those who have been working find themselves in this stage when they retire from their services, which is around 60 Years of age. However in the changing socio-economic condition may lead to either retire early or later then the officially retirement age. Irrespective of whether one wants to retire or not, one has to understand that limitation due to growing age will be there and one should be positively prepared to be in this stage of life. This is as important life events like birth, marriage, parenthood, etc.
Retirement planning needs to be SIMPLE, its execution DISCPLINED, and should start EARLY.
Following Topics should not be taken as expert advice but as a starting point of the discussion for your retirement planning.
Why to plan for retirement?
Uncertainties of old age and need for a decent lifestyle requires one to plan for retirement.
Who should do retirement planning?
All, unemployed, fresher in job, middle aged executive, house-wife, or old person.
When should one start for retirement planning?
As early as possible. If you have not planned till now, right now is the best time to plan.
What should retirement plan consist of?
There are three broad aspects of Retirement plan:
  • - Economic - For decent livelihood.
  • - Healthcare - For protection or treatment during the old age.
  • Legal - To safeguard one from any legal issues during the old age or after the death.
Where the resources will come from?
Largely from one’s own efforts, contributions and some state-sponsored schemes.
What is execution plan?
Execution plan has three basic aspects:
  • - Keep disciplined efforts in the contribution.
  • - Keep record of it.
  • - Keep monitoring change in your needs and revisit plan as many times as one needs it.
If you need further details on the retirement planning please keep on reading!
Social Security System in India
Whatever be government scheme in place, it may not be sufficient or accessible for your needs. Let us elaborate why? First,India does not have a clearly defined and comprehensive social security system in place. Second,being a growing nation, there are severe areas which are considered to be more urgent need of government’s attention and resources. This leads to thin spread of the resources across plan.Third,the corruption at various levels will lead to leakages. Fourth,this allocation of resources needs to given to more than 100 Million beneficiaries. Fifth, the process follow-ups and beneficiaries own ability to overcome all the bureaucratic hurdles to get the benefit of these schemes. After all these challenges one wonders if these all troubles are worth taking. The most important and biggest devastating social change, which has impacted the social security system in India, is the break-up of the joint family system, where elders were taken-care of and respected during their old age. Above, two aspects leave one with only choice to take care of one’s retirement planning into own hands.
Healthcare Aspect of Retirement Planning
During one’s old age one can expect some typical medical problems and increased healthcare expenses. However one can prepare for these by taking up two processes simultaneously:
  • - Preventive Action Planning.
  • - Emergency Situation Planning.
Preventive Action Planning has two simple thoughts:
  • - Understand your current medical condition and improve from this with help of medical and non-medical treatment.
  • - Exercise regularly to make sure that one stays fit and takes precautions in the lifestyle , and food habits to avoid further degradation of one’s health.
Emergency Situation Planning consists of creating a mechanism to support you in-case of emergency. This has following aspects:
  • - Social aspects: You should have a selected and trusted group of people who should be informed if you have an emergency situation.
  • - Insurance Coverage : There should be insurance plan, which should help you to give you coverage during your health emergency.
  • - Self control cash funds: This essentially means that there should be certain cash at your disposal always. As you may find that other system may not be able to respond to you as quick as you need.
Economic Aspect of Retirement Planning
This consists of understanding the need and being aware about resources. Then it may also lead to a person think about additional source if there is gap in the need and availability. Understanding the need: How much fund one needs for retirement is as unique number for each individual. This can reasonably estimated basis some guiding questions:
  • - First understand current situation of savings and investments (i.e. Assets) and loans or other borrowing to be paid (i.e. Debt or Liabilities). If you subtract Debt from the Assets, you get your Net Savings.
  • - Age at the time of retirement. From your current age till retirement, you get a window to improve further your Assets and reduce the Debts, thus improving your Net Savings.
  • - Write down what is your current monthly expense to maintain the standard of living. It is prudent to estimate what will be actual number of dependent with you at your retirement age. In other words, let say if you today you have two kids and two parents along with you and your spouse. It is not unreasonable to think that during your retirement age only two of you will be together as kids will be grown up and independent and parents would have departed from the world.

Now you can estimate that same cost structure will be needed during your retirement time. If you built in a cushion for unknown or one additional person with you in this time period, let’s say add 25% on top of the cost structure arrived. You get an estimate for your annual need. Basis your family history of longevity, you can have an estimate on average age for both of you . Please do add additional 10 Years as due to improvement in lifestyle, medical treatment and awareness has improved the life expectancy in India. Now let’s factor in the inflation. Assume average inflation is 10% Year on Year and fixed rate of return is also 10%. Now you are ready for the estimation. Simply create a table as below,starting from the age when the planning is started till life expectancy:
Age Net Saving a the Start of the Year Total Income During Year( Exclude Taxes ) Total Expense during the Year Net Saving at he end of Year Major Event Impacting the year's Financial Condition
Your Spouse (A) (B ) ( C ) D = A + B - C  
40 38 10,00,000 3,00,000 2,00,000 11,00,00 Daughter's school
.... ...          
50 48 20,00,000 6,00,000 4,00,000 22,00,000 Europe Vacation
.... ...          
60 58 40,00,000 4,00,000 4,00,000 40,00,000 Daughter's Collage, Retirement
... ...          
70 68 35,00,000 1,00,000 10,00,000 26,00,000 Medical Treatment
  80 16,00,000 1,00,000 2,00,000 15,00,000  
Few points to observe while filling up above document:
  • - This may require little iteration for the first time.Please note that your plan needs coverage till maximum life expectancy of the all the family member. So if funds are not lasting till that period, you must plan to invest more.
  • - You must estimate possible inflow and outflow of cash due to any major event impacting your financial plan. e.g. buying a house, marriage of son/daughter, bonus received, receipt of gratuity, inflow of pension if any, etc.
  • - If you plan to work part-time post your retirement, factor in the potential income from this source as well.
  • - Do not forget the healthcare expenditure and travel plans if any during the retirement period.
  • - Each month, look at actual amount on expense and saving to record it for full year.If you think the plan needs update, please do it as soon as possible.

You will realize that for each individual the size of fund required at the age of retirement is different due to unique need.
Legal Aspect of Retirement Planning:
Life remains full of surprises and while we may not be able to see all the future events but some basic activities can help us. Following is the guiding list of activities you can plan of:
  1. Nomination in your all assets class: This helps in securing the control of assets by the nominee easily if something happens to the asset owner.
  2. Make a will.. Try to make will as soon as possible to avoid any conflict in the future. As one can explain the details of a Will, better in own’s lifetime.
  3. If you are planning to part with your some of your finance for your next generation , make it point to plan it, record it, and will it.
If you need further consultation on your retirement planning, please write to us at contact.us@healthplustrust.com with subject : RETIREMENT PLAN.