Shyam

Fiscally Fit: Retirement blues?

Planning ahead and exploring alternative career options can help you beat 'em

Retirement is a pleasant dream for many but more often than not the dream turns into a nightmare as you get into it. This could be due to many reasons e.g. inability to adjust to sudden loss of work, fear of isolation, reduced cash flow, boredom, feeling a lack of purpose, onset of laziness and associated disorders etc. The root cause for most is the abrupt change in lifestyle and lack of sufficient planning.

In the strict sense of the term, to ‘retire’ is to withdraw from active life, to stop performing one’s work. Such a definition is best treated as a restrictive cliché. Sadly though, the notion that, after a certain pre-defined age, everyone must retire from work by default and go out to pasture continues to dominate. I suspect this is the result of Anglo-Saxon influence on setting pre-defined rules for society at large that don’t necessarily apply to the ruling class. It also reflects the narrow post-Industrial Revolution mindset that human life is best handled by grouping us into age cohorts that are made to progress through school, work and retirement as if we were a single batch in the factory line. In my opinion, retirement is something that the individual needs to decide, not the employer. It is absurd to think that we stop being fit enough to work, en masse, at the stroke of a random age like 58 or 60.

All of us, at some point in our work life think about calling it quits. Many hope to retire early, if they amass sufficient wealth. Some even opt for voluntary retirement schemes that dole out good one-time settlement packages. Does early retirement make us happy? Not really, is what occupational scientists have discovered. Early retirees on average lead a less happy life than late retirees. Even among those who have had a full working career up to the maximum permitted age, easing into retirement by first taking semi-retirement seems to be a better option. As much as we may dislike our jobs, engaging ourselves in some kind of work for a significant part of the day (irrespective of financial remuneration), seems to be a necessity for our emotional well being. So the question is: if work is healthy, why stop? For those who read the Gita, this must ring a bell (karma yoga).

In the wrong place?

I know some readers must be ready to pounce on me claiming that all modern day office work does for them is induce stress and cause heartburn. Well, this either means that you are in the wrong kind of job or that you do not know how to de-stress. There is no guarantee that life after quitting work altogether is going to be less stressful.

With the Indian economy growing by leaps and bounds, there is an active job market emerging for retired individuals to engage themselves in a meaningful manner in both for-profit and non-profit organisations. My father in-law has leveraged these opportunities to the maximum, by creating a post-retirement schedule for himself that is busier than my pre-retirement one. By redefining retirement, senior citizens can continue to contribute to society, keep themselves active and even continue to earn if they choose to. Many such jobs come with flexi timing or part-time options, which can be ideal for semi-retirement. Avenues for pursuing alternate career post-retirement include Teaching/Training, Volunteering, Writing, Consulting/Advisory, Contracting, Philanthropy, NGOs, Microfinance, BPOs/ KPOs, Retainer-based engagements, Hospital/charity/trust/administration.

What you need to keep in mind is that some jobs are fundamentally ill-suited to middle or old age. One such job is trading in the stock market, particularly if you have never done it before. People opting for voluntary retirement schemes, are often tempted to “do something” with their lump-sum compensation that can generate additional income. Trading in stock, commodity or forex market may sound very lucrative, what with enough stories online that claim easy money and assured income generating potential. However, one needs to remember that trading is akin to speculating in the markets. The fact is: there is simply no assured way to make super-normal profits in trading. If such a method did exist, the person selling trading software to you for a pittance would instead keep it closely guarded and use the technique himself to turn into a billionaire.

Any lump sum compensation that you receive on retirement is best invested in a diversified manner across long term instruments such as Index funds, diversified mutual funds, shares of blue-chip companies, real estate or fixed deposits. Many financial advisors prescribe liquidating all your equity investments and converting them into bonds, fixed deposits or ULIPs post retirement. I beg to differ on this account. With average life expectancy having crossed 80 years and inflation inching upwards every day, it is advisable to keep at least 50 per cent of your net worth invested in equity markets or real estate even after retirement. It is the only way to protect yourself from inflation.

Planning ahead

Make sure you start planning for your retirement at least two to three years ahead. First get your health insurance in order, if you have not done so already. Think about whether you want to fully retire or semi-retire. If you would like to semi-retire, think about how you would like to engage yourself; what kind of work do you want to do? Start networking and exploring options well ahead. Decide where you will live post retirement keeping cost of living in mind. Make adequate plans for managing the monthly cash flows. What will your sources of income be? How will you ensure that your lifestyle fits the bill?

Those on monthly pension have a tendency to spend the entire pension amount in the early years of retirement to maintain their pre-retirement lifestyle. Some amount of pension saving in early years may be necessary to sustain quality of life and meet medical expenditure in later years. One suggestion is to start reducing your lifestyle expenses prior to retirement, to match your post-retirement level so that it doesn’t come as a rude shock.

Don’t forget to stay active...and have some fun while you are at it.

The writer is a finance specialist. He can be reached at:

shyamscolumn@gmail.com or www.shyamscolumn.com

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Printable version | Feb 22, 2020 10:25:11 AM | https://www.thehindu.com/opinion/columns/Shyam/Fiscally-Fit-Retirement-blues/article14962556.ece

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