Tuesday, 9 June 2015
Reliance Retirement Fund Meet
Reliance is one of the leading financial service companies in the private sector with interests in mutual funds and asset management. Reliance is up with an endeavour for the young population to start planning young for retirement. Reliance capital asset management unveils its first retirement survey.
According to the survey, India is least prepared for retirement among major economies. Hence retirement planning should be the most important financial goal for India. Not planning for retirement will turn out to be a huge economic challenge for India in the near future. Given the advancement in medicine, healthcare and lifestyle, planning for post retirement is must.
In India, only 16% GDP is into retirement assets. Today, only 1% is spent on public health, but if we do not plan ahead, this will increase to 6% by 2050. This rise will cause a huge loss to government and economy.
Amongst other economies, Australia, US and UK are well prepared, whereas India and China are amongst the ill prepared economies.
Why buy a retirement plan?
1. To take care of family
2. To be independent
Most of the people refrain from buying a retirement plan as they believe their children will take care of them. Joint families are giving way to nuclear families and there are so many old people living alone. This calls for urgent retirement planning in India.
Preferred age to buy oneself a retirement plan is between 30-40 years.
Many women today are buying these plans as they no longer want to be dependent, which is quite a positive sign.
The biggest challenge in retirement is inflation. the income stops, but expenses keep growing.
Retirement planning includes 2 phases -
1. Accumulation phase: This is when you build assets aggressively, by saving and investing in the earning years. This is a growth phase.
2. Distribution phase: This is when you use the assets and assure that your retirement is safely funded. It begins when you retire and it requires careful protection, management and use of assets.
Small amounts saved in early age, helps in accumulating a large corpus over the years. Saving alone will not help, aggressive investment strategy is essential.
To ensure a life of dignity in your 'second innings', sensible retirement planning is necessary.
We all work for money all our lives, but is our money working for us?