Save for the golden years

You would have probably missed the news item, buried, as it was in the tumult of LalitGate, Vyapam and Shah Rukh’s boundary wall getting some graffiti-love. Amidst all this hyperventilation was a small news item that ought to be of interest to all of us. The government is planning to put a cap on premature withdrawal of provident fund (PF) money. The move is aimed at ensuring social security for workers in old age.

Prepare for a worry-free retirement period: Most couples do not save up enough for retirement. Representation pic/Thinkstock
Prepare for a worry-free retirement period: Most couples do not save up enough for retirement. Representation pic/Thinkstock

Most of the workforce in the rural areas does not have PF because they work in the unorganized sector. Even in urban areas, PF is not part of the salary structure for millions who work in the unorganized sector. That probably explains why it didn’t interest many people. And then how many of us really think of a retirement plan. For most people, a retirement plan is their children providing for their needs once they are incapable of going to work. Most people I know don’t talk about it like they don’t talk about a will. As if planning or even thinking about it will mean old age is creeping up at a faster pace!

In America there is the famed American Dream of retiring comfortably after 20 or 30 years of work. Experts feel that you need to bank about eight to ten times your pay to retire comfortably. That is in the US. Imagine even half of that in India when we don’t even get the basic social security and facilities that you get in the US.

Most couples do not save up enough for retirement. After decades of working in a job you are barely able to pay for your house, and expenses let alone set aside anything for retirement. And even if you have a small cushion that vanishes in weeks if, heaven forbid, a medical affliction hits you. Medical treatment in India is prohibitive. It upsets the best-laid retirement plans.

Many of us know of innumerable friends and relatives whose entire lives’ savings were wiped away with one hospital visit. Similarly people encash their provident funds, their pension funds to pay for their children’s education, leaving nothing for their retirement, in the slim hope that once the children get good jobs, they will be the retirement plan.

Unfortunately that isn’t happening anymore. Those family homes are breaking up, family values are withering away. Once equipped with a degree and cushy job the son or daughter rarely repay their parents. It is time for people in their thirties and forties to start working on their retirement fund. It must be a financial goal ahead of other goals like vacations, gold jewellery, and a larger apartment.

There are already a 100 million or so people above the age of 60 in India and though there are no conclusive surveys one can pretty well guess, that not even a minor faction of them lead comfortable retired lives. Not even government servants, who could once upon a time lead genteel lives on their pensions.

In India, we don’t have a mindset towards retirement planning. Most think about it only when they are in the penultimate year of their careers. By then it is too late. And so only men do the planning for retirement, if it is done at all. It is still considered uncouth for women to talk about financial security in their later years. For a woman the fate is still to be handed over from father to husband to son. And in some cases daughter.

But with more and more women entering the workspace, and couples working towards financial interdependence, it is time that people woke up to the necessity of making their retirement plans early in life. It is also important to understand that your children will appreciate your financial independence in later years just as much as they will appreciate your financial help in their early years.

Smita Prakash is Editor, News at Asian News International. You can follow her on twitter @smitaprakash

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