Retirement planning is not just some random financial figures but quantifies the long-term goals and investments required to achieve them. Outlook Money’s two-day 40After40 Retirement Expo in Mumbai from January 23, 2024, dwelled on this critical topic, highlighting everything people need, from reinventing to rejuvenating themselves to reach goals.

In his welcome address, Outlook Group CEO Indranil Roy stressed on the importance of retirement planning. He said it is especially important for a country like India with a large young population. He presented data from a survey conducted by Outlook Money and Toluna that had interesting insights on retirement preparedness.

Nidhi Sinha, editor, Outlook Money, emphasised on the need to start early and plan smartly towards creating a retirement corpus. “You should start investing for retirement as early as possible to make your investment journey smoother. If you haven’t started already, it’s never too late. There are strategies to start planning for retirement at any stage. But if you are around 40 already, know that the clock is ticking,” she said. She added that seniors also need to explore options, such as senior living, and focus on their wellness and health needs.

Build Innings Steadily

V. Vaidyanathan, managing director (MD) and CEO of IDFC FIRST Bank, said retirement planning is similar to a well-crafted innings aimed at building a solid score in a 50-overs one-day international cricket match. He said batsmen who accumulate runs only in the later overs often falter. Still, many people make the mistake of overlooking retirement planning until the later stages of their career, leading to potential financial calamities. “The real risk lies in outliving one’s resources, which many senior citizens could face as their number is expected to double by 2050. The cessation of regular income in retirement makes it imperative to manage expenses smartly,” he said.

Also Read: 5 Types Of Pension Plans To Consider For Retirement Planning

Common Pitfalls And Mistakes

Ananth Narayan Gopalkrishnan, whole-time member of the Securities and Exchange Board of India (Sebi), spoke of the pitfalls and mistakes that people are prone to make in personal finance and retirement planning, narrating a personal anecdote of the troubles he faced. He spoke of the fundamental mistakes he had committed by failing to understand the importance of income, expenses, and savings early, adding that it is important to envision the financial future, considering inflation, investment returns, and one-off expenditures, such as education and healthcare. One should not postpone retirement planning until retirement beckons, and neither should one shy away from taking professional help if it so requires, he added.

Importance of Pension

Deepak Mohanty, chairman, Pension Fund Regulatory and Development Authority (PFRDA), asserted the importance of having a pension account in one’s savings portfolio. It’s as important as having a balanced meal, he said. “Why should you have a pension as part of your savings portfolio? Because it is like an Indian thali, you need a little bit of everything. It should have a healthy mix of savings, equities, mutual funds, pension accounts, etc., to make it a wholesome meal. Pension should be on the menu of the saving portfolio,” Mohanty said.

Sashi Krishnan, CEO, National Pension System (NPS) Trust said that our behavioural biases towards money often decides the way we spend for instant gratification rather than saving for retirement. The fact that life expectancy has increased by almost 26 years in the last five years implies that more people will live longer after retirement.

Building Wealth A Sacred Duty

Bharat Shah, executive director, ASK Asset & Wealth Management Group, emphasised on the importance of building wealth as a sacred duty. He said India is at the cusp of a great economic expansion and people must take benefit of the opportunities at hand and build their wealth.

Sankaran Naren, chief investment officer of ICICI Prudential Mutual Fund, underscored the dangers of glossing over the pitfalls in a rising market. He said investors often make mistakes in a bull market when the stock prices soar, and over-optimism leads them to throw caution to the wind and overload portfolios with equity to maximise gains.

Also Read: Five Technologies That Changed People’s Banking Habits In India

Read the full article published in the March issue of the Outlook Money magazine here.