A resource book on post retirement life
Retirement Planning: A Guide for Financial Planners, Madhu Sinha, McGraw Hill, Pp 203, Rs 325.00
ancient Indian philosophy assigns four distinct stages for man – brahmacharya (celibacy), grahasthya (householder), vanaprastha (retreat from worldly affairs) and sanyasa (renunciation). By the age of 50, an individual should discharge all his worldly duties, give up life as a householder and proceed to the forest to meditate and prepare for the after-life.
This holds true for most people but today with a higher life span, man needs to make arrangements for living a satisfactory life without depending on one’s children. Many people, when they retire, find themselves in a fix as they do not have enough money saved aside. In such a situation, retirement planning becomes imperative, as it helps to establish an income goal and gathering of information about its potential sources at retirement. In other words, retirement planning is a process which starts with estimating how much income a person will require after retirement to maintain a comfortable standard of life. Its goal is to achieve financial independence so that the person is not compelled by circumstances to work after retirement.
This retirement planning encompasses plans and actions that individuals engage in to prepare for a smooth transition from a life based mainly around working to a life based mainly around not working.
Though there are many reasons for the middle-aged to plan for retirement, the most important ones are:
* Emergence of the nuclear family system and its attendant insecurity.
* Increasing uncertainties in personal and professional life.
* Growing trend of seeking early retirement and rising health risks.
* Failing interest rates and increase in the cost of living.
Retirement planning is especially important for business owners because their retirement is their own responsibility. With no company pension plan as support, their standard of living in retirement is up to them. One of the first steps in retirement planning is to assess one’s current financial situation and figure out how it relates to one’s goals for retirement. It then becomes an attempt at determining the amount of money he or she would need to save.
The author, after explaining the above points in detail, discusses different investment options like insurance, asset allocation, taxation and estate planning in addition to several retirement case studies with solutions. In brief, the first chapter discusses retirement planning, importance and the steps involved; the second chapter presents a multi-dimensional approach to retirement planning, emphasising the need for preparing oneself mentally for the transition phase after retirement. The third chapter contains the major points and is the most important one as it also discusses the relation between retirement and other dimensions of investments like insurance, asset allocation, investments, taxation and estate planning. The importance of financial literacy for Indian investors is also a part of this chapter. The fourth chapter focuses on how to invest the retirement corpus. The fifth chapter discusses several live retirement case studies with solutions for different types of clients.
All in all, the book can serve as a ready reckoner on retirement planning.
(Tata McGraw Hill Education Publishers Ltd, B-4 Sector-63, Noida, UP-201 301; www.tatamcgrawhill.com)