Change Comes From Within

Recently, I heard a story about a retired gentleman who attends every wedding, birthday party, or social occasion of relatives, friends and even acquaintances. It has become a joke within his circle that there will be at least one confirmed guest on every such occasion.

It may be a funny story to share, but deep down, it conveys a sense of loneliness and purposelessness that afflict the retired generation. This is because we derive much of our meaning and identity from regular work.

At the same time, the idea of retired life is theoretically charming. It promises to give you all the time in the world to do what’s close to your heart without the pressure of adhering to deadlines or worrying about everyday work. In an ideal world, perhaps that might be true, but talk to a retired person and the reality may not be as rosy as it is made out to be, even if you have enough money to see you through.

That, however, is only one piece of the jigsaw that is retirement. The other, and the more crucial one, is having enough savings to last you through a lifetime. The gentleman in question gets a decent pension from the public sector company he retired from, but everyone may not have that luxury.

The old defined pension benefit is slowly getting phased out in India. Even though some states have brought it back, it is difficult to predict if those governments will be able to fund it for long. World over, the debate over retirement and state pension is a bone of contention. The recent protests in France over raising the retirement age are a case in point.

The reforms may cause unease among beneficiaries, but considering that the share of the global population aged 65 years or above is rising, the governments may be squeezed too. This segment of the population is projected to grow from 10 per cent in 2022 to 16 per cent in 2050, according to the World Population Prospects 2022, United Nations. In India, this segment is projected to increase from 10.38 crore in 2011 to 23 crore in 2036, according to a report of the Technical Group on Population Projections for India and States (2011-2036) submitted to the National Commission on Population, Ministry of Health and Family Welfare, Government of India.

Social security is no doubt a right, but the reality is that with rising life expectancy and squeezed state budgets, it may be more practical to start building an individual retirement corpus right now, at whatever stage you are in. The amount you would need at 60 years as monthly expenses is sure to stump you, given rising inflation, if you are not prepared. Sample this: our calculations show that a 40-year-old with Rs 50,000 of monthly expenditure would need more than thrice the amount every month at 60.

To be able to build a corpus that can give you what you need, it’s better to start as early as you can. A 25-year-old would have to save a fraction of what people in their 40s would need to maintain their current expenses, even after retirement. For those hoping and aiming to retire early, the amount to be saved would be much larger, or the expectation of a charmed life after retirement much smaller.

Coming back to the issues of loneliness and purposelessness, it’s crucial to think through your life after retirement. At the very least, it could save you from instances of cheating and fraud. We have delved into detail about how these issues can scar seniors emotionally and financially.

While individuals need to be cautious and vigilant but it’s also time for a policy change to come into effect to cater to the diverse needs of seniors, a segment that is fast expanding. The National Pension System (NPS) is a step in the right direction, but we need more to smoothen the retirement journey through policy changes and sensitisation.