Prosperity can only come by properly balancing the four key personal finance components i.e. earning, spending, saving and investing. If we avoid any one of these, we are bound to face consequences sooner or later.
A retirement plan is an assurance that we will continue to earn a satisfying income and enjoy a comfortable lifestyle, even when we are no longer working. Still we avoid planning for our retirement until we are almost there. These are the most common excuses people have for NOT planning for retirement.
Excuse #10: “I’m too busy”
So many people want to plan for a better retirement, but they don’t have time. They think they’ll take care of it tomorrow or the day after that… and before they know it, several years have gone by. The best advice to such people is to stop procrastinating and start a Systematic Investment Plan today.
Excuse #9: “It’s too soon”
This excuse is often given by people who are in their early 20s and 30s. To them Retirement is too distant and they want to enjoy their life today. This is totally incorrect. The truth is, the sooner you start planning, the better chance you stand of having the kind of retirement you want. It’s never too soon, start now, save more, retire rich.
Excuse #8: “It’s too late”
If you’re already near or past your retirement eligibility date, you may think that whatever you’ve got is what you’re stuck with and it’s too late to do anything about it. Think again. If you’re unsure of what your options are, speak to a professional. Even if you’ve already retired, it’s important to consider how you’re receiving income and how long it will last. It’s never too late to revise your income distribution strategy.
Excuse #7: “I don’t need to”
Many people think that because they’ve been diligent about contributing to a savings account, or have a retirement policy from an insurance company they’re all set. Are you certain that what you’re saving will be enough? What about taxes? What about inflation? And are you sure your money will be properly invested? While saving for retirement is good, there may be other, better options for you and it may prove worthwhile to look into them. You also need consider adequate investment in diversified investment avenues such as equities, bonds, real estate and gold as per your risk profile. A plan for income distribution once you enter retirement is very important.
Excuse #6: “I don’t have enough money to get started”
This excuse seems trivial at first glance, but there is some truth behind it. You need to have money to save or invest money. The biggest challenge many of us face about investments is finding enough surplus funds. Most of the time we are engrossed in balancing our income and expenses that we feel that we don’t have enough money to save or invest. However, you don’t need a million to start investing, you can start with a humble sum of Rs.500 per month and see it grow.
Excuse #5: “My finances are a mess”
This all the more reason to seek an advisor who can help you sort through and understand your assets. Consider speaking with an advisor who can look at your complete financial picture, help you to understand it, and help you to develop a plan to make your “financial mess” work for you. Remember, you can save some money even if a major portion of your income go in servicing various debts – EMIs for car loan, home loan, personal loan or for that matter credit card bills that you’ve accumulated. Draw up a personal budget and stick to it. As Warren Buffet advises, you need first set aside money for investments before thinking about spending it.
Excuse #4: “My family will take care of me”
While, this could have been a valid reason few decades back, but the Social Structure in India is fast changing. The joint family system is getting replaced by Cellular Families. An increasing number of young Indians especially in the urban area are staying away from their families due to employment. Hence people have to develop a corpus to last them through their retirement without any help from family. While your family may still take care of you post retirement, don’t bank on it alone, create a back-up plan at the very least.
Excuse #3: “I have investments provident fund and pension plan, I’ll be fine”
Provident fund is a good tool to save regularly for long term, however it alone can not cover your needs and requirements post retirement. Also, the pension plans (either self-contributed or provided by employer) may fall short of covering your expenses. Furthermore, life expectancy is increasing, so probably you will have to fend for more number of years post retirement. Will your assets last that long? If you outlive your income, what then? You need to have a diversified portfolio of investments for your retirement. It’s a good idea to look ahead and plan lifelong income.
Excuse #2: “I don’t want to think about it”
Many of us are simply afraid of taking financial responsibility or growing old. Well, whether you like it or not, you can not avoid either of the two. But consider this, if you overcome your fear and set a financial plan in motion, you may not have to think about it again for quite some time. It may also give you more confidence to overcome your fear once and for all.
Excuse #1: “I don’t know how”
You don’t need to be a computer engineer to work on a computer. Similarly, you don’t need any advanced knowledge of finance to do your retirement planning. While it is possible to do everything on your own, that generally involves a great deal of research and a huge ongoing time commitment. If you’re putting off retirement planning because you don’t know how, consider speaking to a professional who does and start investing.
Whatever may be your excuse, don’t wait any longer. Unless you start early, you might find that time has passed you by. You will get older, your children will have growing needs, your expenses will rise…..and, before you know it, you may be regretting not planning for the future. Don’t be complacent that you will be okay whatever happens. Plan for your Retirement, today!