WE ALL ARE FACING A VERY BIG RISK OF
LIVING A LONGER LIFE!
Biggest Risk in Life
When it comes to investment related
risks or financial risks, we are aware of the risks like credit risk, currency
risk, market risk, liquidity risk etc. But the bigger risk in today’s life
which we all are facing is almost unknown to all of us. And that risk is the
risk of living longer.
Average life expectancy of Indian is
increased from 35 years to 67.8 years in 2014 since independence (Source: World
Bank, World Development Indicators). And this number is increasing every year.
Average Indian is expected to live longer and the life span is still expected
to increase due to advancement in clinical research and medical field. The
first thought which could occur in anyone’s mind after reading this number is,
GREAT, IT'S A REASON TO CHEER! But the fact, which at first glance looks like a
reason to cheer, is in fact a reason for a BIG WORRY. A longer life, if not
coupled with financial independence is of no meaning.
Classic example is Japan. In Japan
today the life expectancy is little more than 82 years. Look at the growth rate
of economy. It’s almost NIL. As the life expectancy increases the number of
more financially dependent people increases. The same could be the case with
India in after 2 decades.
Three Phases of our life
In our life span we pass through 3
phases.
1.
Learning Phase
2.
Earning Phase
3.
Reaping Phase
In First phase i.e. learning phase
which lasts for on an average 2 to 2.5 decades, one spends most of the time in
getting education and acquiring the skills which he can use in future to earn
money. In Earning Phase which lasts for approx 3 decades where one spends most
of the time in earning money using the skill obtained during learning phase.
And while earning one also tries and saves for the third phase i.e reaping
phase which is also known as retirement. In this phase one is financially
dependent on either one's own savings which is accumulated during second phase
or their children.
Assume the situation in which you
are solely dependent on your retirement kitty and your retirement account gets
exhausted in 7 to 8 years after you attain the retirement and you still have a
decade more to live.
Dependency is curse
More and more number of people are
getting added to old age homes and living their life on the support and pity of
others. It’s not because, they didn't saved during their earning life, they
surely would have. But it's because of lack of knowledge towards channelizing
the savings into the right investments.
These people when they were young
they never have thought that monthly grocery bill which was Rs. 1000 to 2000
per month at that time will rose to Rs. 20,000 to Rs. 25,000 per month when
they retire. They never visualized that the medical expenses will increase many
folds during the old age. They could never imagined that the cooking gas
cylinder which was costing less than Rs. 100 at that time would cost them more
than Rs. 650 at the time of retirement.
They kept on saving but never
planned or never calculated the exact amount of money they would require for
their retirement. This might
happen to you as well. Have you ever planned your investment thinking that the
petrol which is costing Rs. 75 today would be Rs. 500 per litre and the monthly
expense to survive could increased to 1.5 Lacs rupees per month during your
retirement.
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