Top 6 Reasons Explaining the Importance of Retirement Planning

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Top 6 Reasons Explaining the Importance of
Retirement Planning
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• 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.

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• 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
  us.

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• 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.

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• 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.

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• 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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