It is an interesting topic. Is not it? I know you disagree
with me. We all in thirties-to-forties believe that it is too early to think
about retirement. It is many years away. True but is it really that away? I
have a friend who wants to retire at 55, pursue a hobby and he is already
38 now. Last week, we met over dinner and suddenly topic turned to retirement
planning. He was reluctant due to same old reason. Come on! It is too early! This
time, we spent a little more than nanoseconds on the topic and he was quick to realize that
is fast approaching. Another common friend who is elder of both of us was as if
thunderstruck. We asked him, “Hey buddy, what happened?” He felt that he is
left with too little time to plan for his retirement.
That is the hard reality! We wake up when it is too late.
I have recently learnt that it has become extremely
difficult to do retirement planning, primarily due to following reasons:
Mortality Rates are low – Should that not be good news? Yes,
the life expectancy is increasing with time, thanks to advancement in medical
technology and increased general awareness toward healthcare. But that means
more money is required to plan for additional years. Let me make it simple.
Imagine retiring at 60 and expect to live till 90 years of age. For that, you
need money to live 30 years without a regular source of income. Is not that a
long period to plan for?
Low current interest rates – When I first realized this one,
it acted like a bummer. I wish I would not have been that stupid. But I am. I
always felt that low interest rates are good.
For example, low interest rates mean low monthly mortgage installment.
Is not it? But Low interest rates also mean that low income on your investments
including the ones that belong to retirement segment. You need much more money
to save to maintain a similar living standard after retirement.
Do you agree?
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