Retirement is like old age. Despite attempts to keep it at bay, sooner or later it makes an appearance.
Here, we bust some common myths relating to retirement.
Myth 1
I will never retire.
Yes, you will. Everybody has to. You may want to work till you drop dead, but what if you really cannot get a job after 55? What if your health does not permit you to work?
Also, what makes you so sure you will want to work at that time? It's easy to make such assumptions when you are young, but they need not be valid ones.
Even if you are convinced you will eventually run a business that will allow you to take a back seat and keep the money rolling in, you have to plan for retirement.
Retirement planning is about saving sufficient amounts of money to give yourself the option of stepping back from your working life.
Myth 2
I am too young to plan for retirement.
Says who? This is the best time to plan for retirement. The younger you are, the more time you have on your side; this means you can save a greater amount over the years.
Let's say you start investing Rs 1,000 every month towards your retirement kitty. Let's also assume your investment earns 8% per annum.
If you have a 20-year time frame, you would have Rs 5,73,660.
If you had just 15 years, then it would be Rs 3,40,778.
If you had 10 years, it would be just Rs 1,82,283.
Myth 3
I will save for retirement after paying my loans and meeting other goals.
It never works like that. Once your loans are repaid, you will have other goals for which you are saving.
Your home, a holiday, children's education and marriage, the list can go on and on. Keep retirement as a constant goal that never changes. You may find yourself facing periods in time when you are barely putting any amount in your retirement kitty. That's all right. Just don't ignore your retirement kitty outright.
Myth 4
Money saved for retirement must never be in shares.
On the contrary, over the long term, equity gives the best returns. Besides, an investor with a long time frame has the time and ability to ride the ups and downs of the market.
Sure, the Public Provident Fund is one place where you can put your retirement money or even some long-term bonds. Do remember, however, but equity can help give you much better returns. Even if you don't want to buy shares directly, you can invest in equity mutual funds.
Myth 5
I won't live long after retirement.
You don't know that at all. The life expectancy in India is improving. In fact, you may well live up to 80 years, if not beyond. So, even if you retire from an active working schedule by the time you are 60 years old, you still have to provide for the balance 20 years.
Did that scare you sufficiently to open a retirement kitty immediately?
© 2024 Rediff.com -