I'm in my early twenties and there's a long way to go, Why worry about retirement now? - That's what I used to think until June 6, 2015, so what happened on June 6, which made me change my mind? We'll find out in this blog post. Reliance Capital teamed up with BlogAdda for an interactive session with bloggers at Reliance Corporate Office in Mumbai. I was among the few bloggers invited for the event, and since I had nothing else to do that day, I decided to pay a visit.
I called up my blogger buddies (who were also invited) and agreed a meeting point. The event was supposed to start at 11:30 am, all bloggers gathered up in a conference hall at The Reliance Corporate office and the round of introductions began. Everybody introduced themselves, their blogs, what they do and where they see themselves in next 20 years. After introductions, some of the senior officials from Reliance Capital, joined us and the session began. We had with us, Mr.Sandeep Sikka, CEO, Reliance Capital Asset Management, Mr.Himanshu Vyapak, Deputy CEO, Reliance Capital Asset Management, Mr.Ajay Jethi, Chief Marketing Officer and Mr.Sharad Goel, Chief Communications Officer at Reliance Capital.
Why we should start planning retirement at young age?
India is a country with a majority of young population, over 354 million population is under age group of 15 to 30 years, 277 million population is in the age group of 30 to 45 years and more than 364 million are in the age group of 15 years and below, so we can see that majority population is young, while only 186 million is in the age group of 45 to 60 years and 123 million above 60 years.
Projections show that in 2050, India will become 2nd largest old age population after China, with approximately 367 million population above 60 years and 335 million people in the age group of 45 to 60 years. Seeing that India's per capita retirement assets and pension assets as a % of GDP are among the worst in the world, even worst than countries like Mexico, etc. So to make sure that we maintain our standard of living, even after retirement, we should start planning today. That's where Retirement Fund plays a role.
Why we need to Invest in a Retirement Plan?
Market research shows that 78% Indians lack sufficient funds required for comfortable retirement life. The retirement funds account 12% of their total savings. Seeing the rise in population turning older, it can be said that in 2050, the population above the age of 60 will triple the figure than it is now, also since life expectancy is increasing as well, we'll have more years to live and we'll require more funds for that. It seems that Life expectancy, population is not the only things which are increasing, inflation is also going up, so it means that the amount we require today will increase drastically by 2050. Taking other things into account like Medical expenditure, education costs, inflation, etc. We'll need more than we spend today to maintain the same standard of living.
Reliance Retirement Funds
Research has shown that most people invest their money in Bank savings accounts, fixed deposits, Provident Funds, Mutual Funds, Public Provident Funds, Investing in Gold etc. These traditional methods have very low interest rate, while investing in a retirement fund not only gives a high interest rate, but also benefits in tax.
How this works?
If you plan to invest Rs.5000 per month for next 30 years. At 7% interest (which bank generally gives) your retirement assets will grow into Rs.61 Lakhs, which at 15% interest (which Reliance Retirement Funds give) your assets will grow into a whopping Rs.3.46 crores. Now the amount can be withdrawn at annuity of Rs.3 Lakhs per month for over the next 30 years.
Isn't it amazing? If we start planning our retirement at a young age, we can benefit even more. So what are you waiting for, visit Reliance Mutual website and using their Retirement Calculator, start planning your retirement now, it's easy, the calculator will guide you further.
The session by Reliance officials at their blogger meet-up seriously opened my eyes and made me think otherwise. I, now understand the importance of early planning for retirement. I hope this post was informative, if yes, then please share it with your friends & family.
A Big thanks to Reliance and BlogAdda for such an interactive session.