Tuesday, 29 December 2015

Working in Retirement or Saving?

Retirement: It's nice to get out of the rat race, but you have to learn to get along with less cheese. ~Gene Perret

You don’t need to be old to think about retirement, old age is inevitable, and so pondering over a financial support system during that period becomes necessary. In our early working years, we didn’t give a lot of thought towards this, probably because of our life being eccentric at that point and filled with pleasantries.

An easy answer given by a lot of people is saving, and some have said that they are comfortable working in their retirement period. But neither do the people who want to save money, anticipate that their planned savings are not sufficient nor does working in an old age turn out to be feasible.

For people with savings, unexpected situations keep rising, which deplete their savings - marriage of their children, home loans, medical urgency etc. There is no answer to the exact amount needed for retirement. But if you have to calculate this, there is just one equation which depends on the lifestyle that you will be leading during that time. Is it the same as your current lifestyle? Should it be lavish or mediocre? All this is governed by the money that is left with you, when you retire.

A lot of people cannot sit back idle at home, and among them some would prefer to work even past the retirement age. The perception is not wrong, but a certain element of reality would affect this. Firstly, at an age where a lot of functions of body are deteriorated, it becomes too much of a task to expect the unexpected. You are not as active as you used to be, neither are your reflexes. A lot of companies resort to lay-offs based on age as a criteria.

Different occupations bring different occupational hazards. For example – people working in blue collar jobs would find it hard at a certain age to work, because of the nature of physical exertion at their workplace which impacts the health. On the other hand, people in white collar jobs will comparatively find it easier to work.

Indian scenario

Economic and Social regulatory changes have put pressure on the retirement system in India, which currently has less than 6 percent of the entire population covered under private pension plans. Being classified under grade ‘D’, which is not a good grade in any ranking mechanism, there is no support for the poor and aged.

The concept of Joint families, which used to be fairly popular in the country, has been replaced with nuclear families. In a typical joint family, the elders used to be solely dependent on their family members for their needs.
With the advent of nuclear families, largely in the urban areas - there are more senior citizens who take care of themselves.


Between working in retirement and investing your savings, investing your savings is a better solution. Putting your money in PPF (Public Provident Fund), EPF (Employee’s provident fund) and Fixed Deposits might have seemed as a good option in 1995, but now there are plenty of options to get good returns. These are the most popular ones:

1.     Investing in Real Estate: Various strategies can be used to earn wealth in real estate. In one an investor flips the place by renovating it and selling it at a higher cost. In another, investors purchase the property, and intend to hold it for a longer duration.

2.     Investing in Stocks: Invest in a broadly classified portfolio of low-cost ETFs (exchange traded funds) and index funds.

3.     Invest in Peer-to-Peer lending: Ten years ago nobody had heard of Peer-to-Peer lending, and now this seems as a good option. Websites such as Rupaiya Exchange (rupaiyaexchange.com) offer high rate of returns.

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