2. Many of us put off retirement planning . We are too busy trying to
meet our immediate financial needs to think about what will happen 20 or 30
years hence. But retirement planning to most of us is something that is
just an article in financial papers & magazines.
But retirement is a reality for every working person and planning for
it is a real and urgent need. It is one thing that should not be delayed and
taken when you are a just few years away from retirement. It is important to
plan for your post-retirement life if you wish to retain your financial
independence and maintain a comfortable standard of living even
when you are no longer earning. If you are still thinking why you should
save for retirement, just read on:

3.  Nuclear Families -: An increasing number of young Indians are moving away
from the traditional joint family structure making financial independence
critical.
 Rising Life Expectancy -: With medical advancements, average life expectancy
in India has increased significantly. Non-earning retirement phase is now
longer with improving living conditions and medical advancements. It is more
likely that we will spend 25 to 30 percent of our life when we retire, requiring
vast sums of money to support ourselves.
 Increasing health costs -: Total amount spent by individuals on health care is
increasing. It is in direct proportion to increasing life expectancy. Also we have
access to latest medical facilities that cure ailments that were previously
difficult to cure.
 Falling interest rates -: 15years ago PPF interest was 12% & fixed. Now it is
8.7% & linked with 10yr Government Bond yield, would be reviewed each year.
As the economy grows and matures, interest rates will keep falling. Investors
will need to factor in gradually falling interest rates, which means income from
interest will keep reducing.

4. Many individuals wish to retire early and live their life in bliss
after fulfilling their family responsibilities. Many of them dream of
achieving success in an entirely different profession, something
they are deeply passionate about. But, what keeps them from living this
dream is a realization that they will give up their steady, high paying jobs
for a financially risky new innings of their lives.
While you decide on this, you need to be realistic. You cannot
merely set an ambitious target to retire early. It is imperative to take
into account the financial responsibilities you are shouldering and the
financial goals that you need to fulfil for your family, such as – buying a
home, children’s education, their marriage, etc. And then see what you
own at present and can build in future to achieve these goals. This
will help you recognize the gap between reality and your dreams.

5. 15 years ago, the average life expectancy in our country was 59-62
years. Now, it is 72 years. Over the next 10-15 years, we can expect it to
increase to 80 thanks to advanced medical science. Lifespan has been
increasing due to better health and advanced medical facilities
available in the country.
However, the average number of years of employment has
not been rising commensurately. The result is an increase in the
number of post-retirement years without regular income. Therefore it is
more critical now than ever before to ensure regular income for life
after retirement.
If we expect you live till age of 85, you should have retirement
corpus which will last for 25 years after retirement (assuming you retire at
the age of 60 years), meeting regular expenses in the absence of regular
flow of income

6. Calculating your present monthly basic expenditure is the
key to predicting the future corpus you’ll require when you retire.
This is because during your golden years of retirement you must have a
sufficient corpus which can at least maintain the standard of living that
you enjoy at present.
So monthly expenditure will include your monthly basic
household expenditure & also you should consider other additional
expenses that you may incur every month: on medicines, fuel, phone bills,
life style, entertainment, etc. This will help you to calculate your
retirement needs well.
But do not forget to account for inflation, because, as it has
an effect of eroding the value of money

7. Inflation in India has grown at an average of around 7.5%, while over the
past 10 years inflation has grown at an average of around 8.8%. Inflation is
playing havoc all the time by decreasing the buying power of your money.
If your monthly expense is Rs 30,000, and you retire 30 years from now,
you will need whopping Rs 3.76 lakh every month, assuming that the inflation rate
would remain at 8.8%. Even if assume inflation rate of 6%, you will still need Rs
1.72 lakh every month.
Inflation will play crucial part in the calculation of your retirement
corpus. Look at the below table for example.
Current Age 30 years
Retirement Age 60 years
Life Expectancy 85 years
Current Monthly Expenditure ₹ 30,000.00
Inflation Rate 6%
Expected Return on Retirement Corpus 7%
Retirement Corpus Needed ₹ 46,090,472.04

8. This is very crucial step in the retirement planning. Everyone's life is
unpredictable and uncertain. While you might believe that something will not
‘happen to you', God forbid but destiny may have a nasty surprise in the
offing.
One cannot avoid an uncertainty. It might came in any form like loss
of job, medical emergencies which may knock on your door without informing
you. Thus you have to be well-prepared to manage it. Keeping aside 6 to 24
months of your monthly expenditure (including your EMIs) is always
advisable to build a contingency reserve.
It is also important to insure your life with a term plan having an
optimal cover which can take care of the family expenses in case the bread earner
meets with an untimely death.
As an individual grows older, the number of physical ailments and
emergencies also increase. Hence it is extremely important for you to have a
suitable and adequate health insurance policy or mediclaim. This will
ensure that your retirement savings do not get eroded in case something
unfortunate happen to you or your family.

9. There may not be sufficient resources to take care of your medical
expenses in case of any urgent medical treatment. Many people think buying
Health Insurance policy or Mediclaim policy would be enough to take care of all
the medical expenses. But sad truth is, health insurance policy would only
cover the expenses you incurred for hospitalization. It may not be enough if
you would be recommended some regular medication or need to hire full time
nursing attendant in old age.
So Not only do you need an excellent health insurance policy where
you know you will not face too much trouble during claim settlement time
and that will cover you both pre and post retirement, but you also need to
build up a medical contingency fund. It will be supplementary to your health
insurance policy & would come handy if there is rejection of claim or you need to
undergo treatment which is not covered by your mediclaim policy.
So it is advisable to maintain a medical contingency fund worth 5 –
10 lakhs depending upon how much you can afford.

10. Being in the earning and asset accumulation phase, you might
have accumulated some assets over the years. You would have assets in
the form of investment in fixed deposits, gold, land, ancestral
properties, shares, bonds etc. & you would have liabilities in the
form of loans like home loan, vehicle loan.
You should classify which of these assets you would keep for
your retirement and which of these you would pass on to your heirs.
And as far as liabilities are concerned, of course, since you will never wish
to pass them on, you should make sure that all your liabilities are
repaid as soon as possible.
This will give clear picture about what you posses &
monetize in the future & gap between your current assets & corpus
you need at the time of your retirement.

11. How one should go about saving for own retirement plan?
Answer is Asset Allocation. It is investment strategy that helps to
keep balance between risk & return of asset classes. It refers to
investing a certain percentage of your savings in respective asset classes
such as equity, debt, gold & real estate. Asset allocation percentage is
determined on the basis of time horizon to accumulate for your financial
goal. Longer your time horizon for the investment higher the
amount of risk you can afford to take & higher allocation to riskier
assets.
Asset Allocation As per years to goal
Time Horizon Equity Debt Gold
0-3 years 10% 85% 5%
3-5 years 40% 55% 5%
5-8 years 55% 35% 10%
8-10 years 70% 20% 10%
More than 10 years 80% 10% 10%

12. Your Age 30 yrs
Retirement planned at age... 60 yrs
Life expectancy 85 yrs
Current Monthly Household Expenditure ₹ 30,000.00
Time to retirement 30 yrs
Expected inflation per year 6%
Monthly Expenditure – at retirement age ₹ 172,304.74
Annual Expenditure – at retirement age ₹ 2,067,656.82
Provision for travel, healthcare annual expenditure ₹ 50,000.00
Travel, healthcare will inflate by 10%
Travel, healthcare at time of retirement ₹ 872,470.11
Annual expenditure at retirement ₹ 2,940,126.94
Post retirement expected inflation 6%
Post retirement life expectancy 25 yrs
Expected return per annum post retirement 7%
Corpus required at time of retirement ₹ 65,209,317.44
Investments already made for retirement ₹ 1,000,000.00
Growth expected per annum in the investments 10%
Investments corpus at time of retirement ₹ 17,449,402.27
Additional Corpus Required ₹ 47,759,915.17
Per Month Investment Required ₹ 20,953.53
Per Year Investment Required ₹ 263,949.44
One Time Investment Required ₹ 2,737,051.64

13. Maintain investment discipline till you achieve your retirement corpus target
Determine Asset Allocation according to the time horizon for the retirement.
Decide which of the current investments would like to keep aside for your retirement
Build medical contingency fund to supplement Mediclaim or health insurance policy.
Buy Term Life Insurance, Mediclaim policy to secure financial future of the family.
Build contingency fund which will take care of 6 to 24 months of expenses including
EMI.
What is your current monthly expenditure & what will be its inflation adjusted cost in
the future?
How long you would live? What is your life expectancy?
Decide when you want to retire?
So when you are planning for retirement