One day you are spending your first salary, and in a flash, your colleagues are cutting a cake to celebrate your retirement as you bid good-bye. Yes, life goes by that quickly.
Before you know, you will be paying daily living expenses, struggling with medical costs, and fighting rising inflation. There are always medical emergencies in old-age. So, having an adequate corpus to cope with all these is crucial. But it is evident to lose track of a long-term financial goal. This is why you need to plan your retirement. Retirement plans are crucial for everyone.
Following are the four reasons why you need retirement plans
- Medical emergencies – With increasing age, new health problems arise. Medical expenses make a huge hole in your pocket post-retirement. Studies show medical inflation is increasing by 14-15% a year. This suggests that health costs will probably become 4 times what they were ten years ago. Take a decent retirement plan, and never lose sleep over long and multiple hospitalisations. With enough retirement corpus or pension, post-retirement you will always be well-taken care of.
- Inflation – Price rise is a common fact. The impact of inflation, even if it appears small in the short-term, can be massive over a few years. In developing economies like India, consumer-level inflation can be more than 5%. Even if you are retired, most costs will always remain unchanged. You might not have EMIs, but you will still need to pay for groceries, medicines, and pay off utility bills. A good pension plan must be purchased in such a way that anticipated inflation is accounted for.
- No state-sponsored pension – Private sector employees in India do not have a fall back option like a state-sponsored pension. The good part is that your pension strategy gives you the flexibility to buy a retirement plan and remain in control. Government-funded pensions are a fixed amount that can remain as is for years. There are small benefits for senior citizens, but there is no obvious income solution from the government. So, getting a robust retirement plan is the smart thing to do. Once you know your financial goals, purchase a pension plan and get a self-sponsored and stable retirement income!
- Nuclear families – Long gone are the days when the elderly could rely on monetary support from a joint family. The culture of joint Indian families is transforming as couples are going nuclear and staying separately. They also have fewer children. 2-3 decades down the line, there may not be relatives to look after you. Children, when they grow up, want to move away for jobs elsewhere. Also, the pressure to earn more money and have a decent lifestyle would not give them enough time to take care of their parents and/or elders.
Hence, it is crucial to plan your retirement without waiting for any financial assistance from your immediate family or offspring. There is a lot of mental stability in having the ability to buy your medicines, get food for yourself and also for your spouse. Why should it change when you are retired? A retirement plan lets you keep your head high and live a retired life full of dignity and respect.