Yes, I know that I have to plan for my retirement. But is not there enough time to do that? I think so. That’s why I have decided to start this planning sometime in near future. I will start the process after I settle few things in my office. I will start the process after I get that ever-elusive promotion. I will start the process after I shift to my new house, finally.
But still I think I can manage. I have seen / overheard many of my subordinates planning for their retirement by investing small amount every month. I earn huge compared to them. If they can manage, so do I.
After all I have struggled a lot to reach at this position in my career. So I strongly believe that I should enjoy my life to its fullest. I find so much satisfaction in giving expensive gadgets to my children or setting out for a surprise vacation trip in Goa or Gangtok with my family. Yes, I spend a lot in all these, but trust me one day I will shift my focus to savings when I will have enough of everything.
Moment of Truth!
I was pretty sure that everything will fall in place some day. Still for curiosity sake I decided to consult a Certified Financial Planner one day and verify my findings. Now, I know him for a long time as we studied management together. We started our respective careers also almost at the same time. I remember very well I was 26 then. Now I am 44. Time goes so fast, na?
Now he asks me some basic questions. My answer was as follows:
My age: 45
I plan to retire at age: 60
My life expectancy: 85
Current monthly expense: Rs.35,000
Now, his turn. He made the following assumptions:
Inflation: 6%
Tax slab, I will be falling in post-retirement: 30%
Return (p.a.) on investment before retirement: 14%
Return (p.a.) on investment after retirement: 8%
Then he came out with some disturbing figures, which I did not like at all, but could not do much as those were all truth and staring at me. He had also shown me some scenarios to show the time value of money or what difference it could have made if I started saving early.
|
Target Retirement Corpus |
Monthly Investment Needed |
|
| If I started at age 30 |
8.10 Crores |
Rs. 15,000 |
| If I started at age 35 |
5.65 Crores |
Rs. 23,000 |
| If I started at age 40 |
4.17 Crores |
Rs. 35,000 |
| If I started at age 45 |
3.08 Crores |
Rs. 55,000 |
| If I started at age 50 |
2.27 Crores |
Rs. 94,000 |
These were enough. I have experienced my moment of truth!
One can see the delay cost! Future plan can’t be done in future, plan now, plan is itself for future.