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Top 6 Reasons Explaining the Importance of Retirement Planning


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Title: Top 6 Reasons Explaining the Importance of Retirement Planning

Top 6 Reasons Explaining the Importance of
Retirement Planning
  • The concept of
    retirement in India has undergone a paradigm
    shift in the last couple of years. Retirement
    opens a whole new chapter for many individuals,
    when they pursue the work they love to do and
    convert their hobbies to professions. Theres an
    increasing trend of individuals opting for
    voluntary retirement as they reach the other side
    of 40s and live for over 85 years.

  • Earlier this year, a survey titled HDFC Life
    ValueNotes Life Freedom Index was conducted in 11
    tier 1 and tier 2 cities to understand the
    current state of financial planning in urban
    India. The survey revealed that consumers are
    skeptical about the adequacy of their financial
    plans to meet their desired standard of living
    throughout their lifetime. In fact, only 13 of
    youth and women are extremely confident that they
    have adequate retirement planning in place.
    Though the wisdom investor segment (45 years and
    above) scored better in the level of confidence,
    their percentage stood at only 24.
  • There are many reasons why planning for
    retirement is important like any other goals
  • 1. Increase in life expectancy Our
    generation will live longer than previous ones
    due to improved medical and healthcare, implying
    the need to gather enough funds that can sustain
    longer life. This also implies that the
    healthcare needs and expenses are likely to haunt

  • 2. Shortfall in Employer Funded
    Pension/Pension Funds The employer or
    government funded pension schemes are less likely
    to sustain the income needs post retirement
    plans. The pension that one may receive from
    these schemes will not be sufficient to maintain
    the lifestyle. This is the reason many
    individuals worldwide supplement their state or
    employer funded retirement plans with
    self-funding- i.e. pension plans.

  • 3. Change of social structures In
    spite of family support, many retirees dont
    prefer depending on the relatives or children for
    meeting post retirement expenses. Maintaining
    independent lifestyle is sustainable only when
    backed with a financial cushion.
  • 4. Lack of social security system There
    is no social security system in our country.
    Hence one has to plan to build the entire corpus
    to help meet the regular income or any
    contingency post retirement.
  • 5. Desire to remain contributor The
    want to contribute to the family by providing and
    supporting the kids or grand kids at milestones
    of their life remains even after retirement is
    inevitable. Starting an independent venture is
    also an emerging trend. These can be fulfilled
    only when one is financially self-reliant.

  • 6. Rest and relaxation After fulfilling all
    your responsibilities, you may want to build a
    retirement corpus to go on holidays, to pursue a
    hobby etc.
  • Keeping these key points in mind, its advisable
    to seek guidance from a financial planner for his
    expert views on your financial plan. Retirement
    is not just about age, its highly dependent on
    the kind of lifestyle youre living and wish to
    continue living.

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