The following are some key reasons as to why you need to plan for Retirement.
Note: All the details below are with respect to India unless stated otherwise.
Lack of Schemes Social Security
This is probably the most important reason. India is one of the fastest growing/developing nations but we still do not have a strong scheme that can be compared to the Social Security System in the United States.
If we had such a scheme, do you think thousands of old aged people languish in old-age homes and in orphanages without proper food or shelter or medical facilities?
Unfortunately, we can’t blame our government because they do not have the money or the means to provide retirement income to everyone. If you ask me why cant they, then ask the same question to people around you when you see them not paying taxes. In the United States, Social Security is available to everyone who paid their taxes promptly and paid their Social Security contribution on a timely basis. Do people around us do so? When people don't pay the government what is due (in terms of taxes) we can’t expect the government to pay us back when we are old. Isn’t it?
Coming back to topic, at the end of the day, we are forced to save up money for our own future and unless we save money for our retirement, we are going to find it extremely difficult to survive post our official retirement.
Unforeseen Medical Expenses
As we get older, our medical requirements become more significant. A man in his 60’s will have far more medical expenditure than someone in his 20’s or even 30’s. so, when we cross that age of 60 and need money for our medical expenses, where will we go? We would need a retirement corpus that we can dig into at such times.
If you are someone who says, India is a land of culture where parents are treated with utmost respect and our children will take care of us, go back to the previous paragraph and read the trivia. Do you think we will have thousands of old aged people suffering in orphanages and old-age homes if this was the case? They are suffering without proper medical care because they don't have the resources for it. We shouldn't be in such a state. Or do you want to be in such a state?
Old age typically brings medical problems and increased healthcare expenses. Without your own nest egg, living out your golden years in comfort while also covering your medical expenses may turn out to be a burden too large to bear - especially if your health (or that of your loved ones) starts to deteriorate.
However, to prevent any unforeseen illness from wiping out your retirement savings, you may want to consider obtaining medical insurance, to finance any health care needs that may arise.
Financial Security of our Children & Grand Children
Moving on to a more positive angle, let's consider your family and loved ones for a moment. Part of your retirement savings may help contribute to your children or grandchildren's lives, be it through financing their education, passing on a portion of your nest egg or simply keeping sentimental assets, such as land or real estate, within the family.
Without a well-planned retirement nest egg, you may be forced to liquidate your assets in order to cover your expenses during your retirement years. This could prevent you from leaving a financial legacy for your loved ones, or worse, cause you to become a financial burden on your family in your old age.
Wouldn't you want to fund your grandsons dream to study his Masters degree in the United States? How proud would you feel if you can do it?
Flexibility & Peace of Mind
As we know, life tends to throw unexpected bouncers every now and then. Unforeseen illnesses, the financial needs of your dependents are but a few of the factors at play.
Regardless of the challenges you may face post retirement, a sizeable retirement corpus could be just what the doctor ordered for a peaceful life post retirement!!!
Sneak Peak: The Next article in the Retirement Planning Series is going to be about how much money would you actually need to retire...
Happy Retirement Planning!!!