Living long is blessing or curse, it’s your choice.

During my workshops when I emphasis on retirement planning, individual’s  doubt do we need so much corpus to live or will my monthly expenses  shot up that much.

My standard answer to the participants, please look 10-15 years back and compare your current lifestyle. Along with inflation and increase in standard of living our monthly expenses jumped few times in a decade or so.

Is that a threat? not so completely. But the more danger is living longer. In a recent study AT Kearney Global warns that by 2050, more than 2 billion will be in the age group of 60 plus.

Leaving the global trait,as per the study, in India, people once they reach age of 60,they tend to live for another 13 years.

So unless the individual’s in their forty comes out of slumber, living longer will be a curse for them. Already in USA due to poor retirement corpus individuals are inclined to work long. Today, the fastest –growing work force in USA is 65-74.

Tough in USA it’s possible for people to work longer, with huge population such as our country getting job at 30 is a challenge forget about working at 60.

Consider this, take a real case of our client Sandeep(name changed) aged 40, is spending monthly a sum of Rs 30,000 towards his household expenses.If the inflation continues to grow at an average of seven per cent over the next 20 years,the monthly household expenses of him will be Rs 1.16 lakh or annual living cost will be Rs 13.96 lakh.

To have such an income at retirement he should have a corpus of Rs 2.5 crore and it should earn interest of one per cent over and above the inflation.Earning one per cent will be challenge when his risk appetite is low.So,in the nutshell he should have corpus more than this.

Staring late will be pain, but better to be late than never.For instance to reach such a target he should save monthly a sum of Rs 25,400 for next 240 months to reach the target.

Currently Sandeep has a balance of Rs 15 lakh in his EPF account and he and his employer  contributes Rs 5000 towards the same.He expects that his salary will be increasing at 5 per cent per annum.If the EPF continues to declare interest of 8.5 per cent for next 20 year it will help him to accumulate Rs 91 lakh.Still he will have a shortfall of Rs 82 lakh.To meet the target he needs to save a sum of Rs 8300 per month to reach the retirement target.Hence,living longer will not be a curse for him.

Wake up to the reality. Wealth creation is all about sacrificing today’s pleasure for the “golden years”.

The author is chief financial planner  SPP Wealth and Financial Planners P ltd.

(Write to us at info@myassetsconsolidation.comfor any advice).