Retirement planning

1. Pension or Tension
Retire happily ……….
Retire = Death of income
Latest UN report : The number of indians above 60 yrs is
projected to rise by 55% by 2050.

2. 3 idiots
 1. How to buy all the expensive medicines Dr has
prescribed ?
 2. How to buy the expensive toy his grand-daughter
wants ?
 3. Sitting in Thomas cook’s office, whether to go to
Australia or Europe for holiday ?
How soon & how much , will decide the
above …

3. Inflation = Bob Biswas ( Kahaani)
 Silent & ruthless
 Milk Rs 43/- litre will cost Rs 230/- per litre ( @6%
inflation) after 30 years.
 Healthcare expenses 2% when u r 25 , will rise to 60%
when u cross 60.
 Healthcare inflation is rising 3 times than WPI.
 Uncertainty of returns ( only exception JS)

4. Late start , bigger problem than
uncertain returns.
 10% people start planning for retirement in the first 5
years of their careers.
 20% people have retirement plans in place by 10th year
of their careers.
 Indians start thinking about RP when they are 30 yrs
old.
 Actual implementation happens when they are
nearing age 50.
 Magic of compounding

5. Magic of compounding
 1 grain of rice / double every month
 Yr 15 = 6.5 Kg
 Yr 20 = 210 Kg
 Yr 25 = 6700 Kg
 Yr 31 = 2.15 L Kg

6. National Pension Scheme
 NPS is a social security initiative by the Central Government.
 This pension program is open to employees from the public, private
and even the unorganized sectors.
 The scheme encourages people to invest in a pension account at regular
intervals during the course of their employment.
 After retirement, the subscribers can take out a certain percentage of
the corpus.
 As an NPS account holder, you will receive the remaining amount as a
monthly pension post your retirement.
 Earlier, the NPS scheme covered only the Central Government
employees.
 Now, however, the PFRDA has made it open to all Indian citizens on a
voluntary basis.
 PFRDA ( Mr Supratim Bandyopadhyay, Chairman)
 The scheme is portable across jobs and locations, with tax benefits
under Section 80C and Section 80CCD (1B)

7. Taxation
 You can claim any additional self contribution (up to
Rs 50,000) under section 80CCD(1B) as NPS tax
benefit.
 The scheme, therefore, allows a tax deduction of up to
Rs 2 lakh in total.

8. Withdrawal Rules After 60
 Contrary to common belief, you cannot withdraw the entire
corpus of the NPS scheme after your retirement.
 You are compulsorily required to keep aside at least 40% of
the corpus to receive a regular pension from a PFRDA-
registered insurance firm.
 The remaining 60% is tax-free now.
 As a pension scheme, it is important for you to continue
investing until the age of 60.
 However, if you have been investing for at least 3 years, you
may withdraw up to 25% for certain purposes.
 These include children’s wedding or higher studies,
building/buying a house or medical treatment of
self/family, among others.

9. 2 types of old people in world
 1. Who live happily
 2. Who live lonely & abandoned lives
 WHY ?
 Absence of regular income
 No identification with the older U ( oldify.app in
iphone or old family album)

10. Regular income after retirement ?
 Total indians who are earning = 45 Crs
 People with jobs = 7.2 Crs
 Govt Jobs = 1.8 Crs
 Pvt jobs = 5.4 Crs
 Business = 23.85 Crs
 Daily wage earners = 13 crs
 96% indians don’t have pension facility.

11. Indian Outlook towards retirement
planning
Save for
retirement
Don’t save for
retirement
Not aware about
retirement
planning
Govt employees 20% 32% 48%
Pvt sector
employees
11% 26% 63%
Businessmen 5% 28% 67%
Daily wage earners 6% 31% 63%

12. Earlier generations didn’t require
retirement planning because ….
 1. Joint family system
 2. Short life span after age 60
 3. Higher rate of interests on investments

13. Things have changed now ….
 Nuclear families
 Big strides in medical science
 Low rate of interests on investments
Living too long is bigger problem than dying too young
( if retirement planning is absent)

14. Life span is increasing
 Modern medical facilities
 Earlier life expectancy was 67 yrs, now it is 77 yrs & is
expected to touch 85 yrs by yr 2030.
 Committing suicide because of physical & mental pain
( if money for medication is not there) is crime in
India.

15. Retirement planning is a MUST
& should be done on yesterday’s
basis.

16. Myths about
retirement

17. 1. I can easily manage my
retirement expenses
 Earlier times
Working life : Age 18 – age 60 ( 42 yrs )
Retirement life : Age 60 – age 67 ( 7 yrs )
 Future TENSE
Working life : Age 25 – age 55 ( 30 yrs )
Retirement life : Age 55 – age 85 ( 30 yrs )

18. 2.Expenses reduce after retirement
Expenses Year 2000 Year 2015
Health 100 400
Electricity 100 266
Fruits, vegetables 100 717
Fuel 100 316
Gas 100 335
Grains 100 381

19. 3. I can depend on my kids
 They themselves are struggling to float in this cut-
throat corporate world.
 They themselves don’t have job security.
 Their own cash flow can stop anytime.
 They are already over-leveraged.
 They have to run faster to stay where they are.

20. 2.Expenses reduce after retirement
 20 yrs ago , monthly budget of a middle class family=
Rs 6,000/-
 Today = Rs 60,000/-
 20 yrs later, Rs 6,00,000/- ???

21. 4. Interest on my savings
 ROI in 1985 @18% ( Rs 1500/- pm interest on Rs 1 lac)
 ROI in 1995 @14% ( Rs 1166/- pm interest on Rs 1 lac)
 ROI in 2005 @11% ( Rs 916/- pm interest on Rs 1 lac)
 ROI in 2016 : @7% ( Rs 583/- pm interest on Rs 1 lac)
 ROI going down & inflation going UP ..

22. 5. I will think about retirement
when I am nearing retirement
Age Retirement
age
Saving
Window
Monthly
savings
Maturity
amount
Loss due
to delay
30 60 30 1ooo0 2,17,13,211
40 60 20 10000 75, 60,300 1,41,52,911
50 60 10 10000 21.03,740 1,96,09,471

23. Lack of retirement planning results
in ….
 Poor health
 No freedom
 No self-respect
 No satisfaction

24. Would u like to be burden on your
kids after retirement ?
 Do u think your kids will take care of u ?
 Do u think your brother/sister & their kids will take
care of u ?
 Do u think any other relatives of yours will take care of
u ?
 Do u think GOI will take care of u ?
 Only (today’s) U, can take care of (tomorrow’s) U.

25. Quotes from few retired people
 Lots of things were pending during my working life , I
am going to enjoy them now.
 I want to take some rest now.
 I have to search for a new job immediately after
retirement.
 Thought of retirement scares me.
 Unfortunately some people can never retire.

26. Few opinions of people on
retirement planning
Age Dialogue
30 Retirement planning & me ? R u mad ?
40 My father needs pension. Go & ask him.
50 My topmost priority today is my son’s education & daughter’s
marriage, everything else can wait. ( You can take loans for these
milestones but no one will give you loan for old age expenses.)
60 Wish u had met me 20 yrs ago …

27. Helpage India survey findings
Old people above age 60 :
 42% are insulted on daily basis
 37.8% are verbally insulted
 28.2% are ignored & are tortured financially
 Son & daughter-in-law are the biggest tormentors
 53.4% can’t answer to above insults
 Main reason for torture is property
During golden years u r called rich, if u own property but
u can only be free ( financially, mentally, physically
etc) if you have liquid cash.

28. Your only true son ::: LIC
 Most trusted & only indian financial brand which is
successfully & honestly operational for last 64 yrs.
 When you are investing long term ( invest for 30 yrs &
get returns for 30 yrs) , you need a stable & 64 yrs
young hand like LIC.
 U/s 37 of Life insurance laws , all the investments &
committed returns are safeguarded & guaranteed by
GOI.

29. Current age 25 50 55 60
Pension pm 25000 25000 25000
Investment pm 6000 4000 2200
Guaranteed BM 17 L + B 13 L + B 9 L + B
Amount to Family 60 L 56 L 52 L
Current age 35
Pension pm 25000 25000 25000
Investment pm 20000 11500 6600
Guaranteed BM 28 L + B 23 L + B 17 L + B
Amount to Family 71 L 66 L 60 L

30. HAPPY GOLDEN YEARS ……
Prashant Sawant
Global Training Group, India
98204 08795
Prashantsawant.com