Ask 73-year-old Delhi-based Ravinder Kumar Arora his secret to living such a happy retired life and he promptly replies, “disciplined savings and sound investments done in early life.” A war veteran, Arora had to leave the Army because he lost his left leg in the 1971 war which left him confined to the hospital bed for a long time. “I just took it in my stride and after nine years in service, I retired at the age of 30,” he says.

Having cut his teeth with the 1965 China war in the Army, and then being posted in tough terrain, there was hardly any room to spend what he earned. There is something about certain professions, which leaves you with little room to indulge what you earn. His wife, Dr. Manju Arora, 68, took an early retirement from the MCD where she worked as a doctor as well as an administor; she says her work rarely left her with the time to spend more than what was necessary. “Even though I had not planned my early retirement like many others do, I was never a spendthrift,” she explains with a chuckle.

Going by the experience shared by the Aroras, life in retirement looks very comfortable, even if you have not meticulously planned for it. But, both of them are examples of retirees who believed in saving money and living within means. Words such as frugal, living within means, value of savings and zero wastage on anything were drilled into people, which ensured a life without financial worries.

Income in retirement

For a generation of Indians, the employer provided pension worked well to manage life in retirement. Those who worked in government organisations, banks and PSUs, had guaranteed pension benefits, with healthcare thrown into the deal for life. This, to a large extent, is why those who have been in retirement over the past decade are able to still manage well with their respective pensions. In fact, even those who retired from the private sector managed to create some form of retirement benefit by way of PF and savings, which helped create sources of money to flow in even when they stopped working full time jobs.

Such a scenario is almost unthinkable of among several people who are likely to retire in the coming decade. With the assured return pensions fading fast and self-funded pension is becoming reality, one has to actively work towards creating income streams which would play an important role when one actually retires. “I retired as a maths teacher and then took up teaching assignment because I was restless,” says Jaipur-based Nem Singh Dagur, 74. Dagur, who has always been passionate about his work, has the luck to find his skills as a math teacher being sought after even after his retirement.

To make sure that there is money flowing in during your retirement, you need to ensure that there are sources to get the money from. For instance, those who have a defined pension, the monthly pension could act as a source to maintain their expenses. If there are savings from this pension, it should be invested or set aside into instruments which in turn could help you create a bigger corpus for another day. Several retirees are now extending their working life by a few years, especially in the early years of retirement to increase the tenure of their earning years.

In doing so, they are able to stay away from dipping into what they have saved towards retirement by a few years. A few obvious income streams include rental income and earnings from investments, besides any form of pension payout. “My pension along with whatever I make from my current job has been more than sufficient for me and my wife,” explains Dagur. He is content and comes across as someone who has always lived a life within his means.

Fixed and variable

Although Dr. Arora is no more practicing to make a living, she is in a profession that clearly has no retirement age. “I have the rental income as a fixed component to take care of my retirement,” explains Dr. Arora. It is a good habit to split the money that you need in retirement into two buckets—fixed and variable to meet the regular expenses as well as the variable expenses. This way, you would not have to worry about managing your expenses when necessary.

Even among those who are planning to retire in the future, this approach will help them address their anxieties of managing the money that they may have added up towards expenses in retirement. Remember that one of the biggest challenges that many who will retire in the future will face is maintaining one’s lifestyle in retirement. And, although lifestyle is a very personal thing, it would help if one realises this early in life. A lifestyle which is simple and does not involve wastage of money no matter what age, in all probability will ensure that you never face financial crisis during your working years or in retirement. If you want a more elaborate lifestyle—earn more and save more. And, if you want your golden years to be spent in comfort, like the Aroras or Dagur, make sure you have created the necessary income streams to manage a comfortable retired life.

rimme@outlookindia.com