Most of us grew up watching movies, gazing in awe at stars with their larger-than-life personalities and ability to overcome any challenge life throws their way. While these films were a major source of entertainment, they also inspired us at times.
Iconic films are characterized by their memorable dialogues. Dialogues like “ZIndagi badi honi chahiye, lambi nahin” and “Mein aaj bhi phenke hue paise nahin leta” have stood the test of time and are recited by people who might not even have been born when the movies with these lines came out.
The power and punch of these dialogues lies not only in the way they are delivered, but also in the truths of life they carry within them. We recognize the timeless essence these words carry, and maybe that’s why they strike a chord. Let’s see if there are any lessons we can extend from some of these unforgettable dialogues into the rather prosaic world of retirement planning.
“Tareekh pe tareekh, tareekh pe tareekh…..”: Start early
When it comes to starting to save for retirement, we usually think we have a lot of time ahead of us, which is why we keep putting off the decision. Getting started with retirement planning early has a big advantage, because the power of funding can work wonders. The savings pool grows significantly over a longer period of time, bringing you closer to the desired retirement corpus. So, the “tareekh” to start planning for retirement is “now”.
“Ek baar jo maine engagement kar di…..”: Discipline is the key
Whether it’s a plan to maintain physical health or improve financial health, discipline is key. The old adage that “slow and steady wins the race” is especially true when it comes to planning for retirement. Regular and systematic saving ensures that setting aside money on a regular basis, usually monthly, becomes second nature to us. In market-linked investments, the principle of rupee cost averaging comes into play. This ensures that there is no need to wait for the “right time to invest” and also facilitates decision-making. Thus, if starting early gives us a definite head start, it is a sustained and systematic investment that can convert this head start into a decisive and tangible advantage.
“Aaj mere pass buildingein hain, property hai, bank balance hai, bangla hai..”: Importance of diversification of retirement income
Most people are familiar with the concepts of diversification and asset allocation. If we extend this to the area of retirement planning, the key point is that a person’s retirement income should include at least three to four different sources. Sources of income can be deposit interest, dividend income, rental income, fixed income from annuity plans, employer pensions, etc. Having income from multiple sources is a good way to reduce reliance on a single source.
We must remember that every source of income carries some element of inherent risk. Interest rates may fluctuate. Market returns will vary over time. Rental income is also cyclical in nature and subject to ups and downs. It is therefore not advisable to rely on a single source. Multiple revenue streams ensure that the risk is spread and thus makes our plan more robust.
“Kya pata, kal ho na ho”: importance of adequate insurance
To say that life is unpredictable would be stating the obvious. Over the past two years, we have faced extreme unpredictability. If there is one thing we should take away from this, it is to make plans that rest on solid foundations, capable of withstanding the most violent shocks. And when it comes to financial planning, that solid foundation is provided by adequate life and health insurance coverage.
“Picture abhi baaki hai, mere dost”: Retiring from work, not life
Retirement could and should be the beginning of the golden phase of life. This is a distinct possibility for three reasons. First, with longer lifespans and better access to health care, people who will retire will do so with their physical abilities to enjoy life to the full. Second, during our working years, time would have been the most scarce commodity. Retirement is that phase of life when time is available in abundance. And finally, good financial planning can ensure that money will also be in abundance. So, with available health, time, and money, what it takes is the right mindset to get the most out of all three.
Life after retirement is the beginning of an exciting chapter, and it can only be expected if it has been planned. If one is prepared financially, this chapter can be lived with joy and happiness as one has never lived before. And you can deliciously say and sing “All izz well” every day of your retired life.
The author is Product Manager, ICICI Prudential Life Insurance
(Disclaimer: The views expressed are those of the author and Outlook Money does not necessarily endorse them. Outlook Money will not be liable for any damages caused to any person/organization directly or indirectly.)