It is important that people not relegate retirement planning to the future but start it now. You would wonder how much truth there is to this statement. At Outlook Money’s 40 After 40 Retirement Expo on Friday, an all-women panel comprising Bhuvanaa Shreeram, co-founder of House Of Alpha, Dilshad Billimoria, founder and chief financial planner of Dilzer Consultants, and Priya Sunder, director of PeakAlpha Investment Services, and moderated by Nidhi Sinha, Editor, Outlook Money, answered questions for those wondering what is the right time to retire and what it truly means to achieve financial freedom.

Here are the edited excerpts:

Q: How do you define financial freedom? Whether it’s 40s, 50s or 60s?

A. Bhuvana says, “Different people define financial freedom in different ways. But I would say it’s not so much about money but time. The freedom of being able to spend your time the way you want is what is financial freedom. So if you have the choice to work or not work or do what you choose, then I think that is freedom in the real sense.”

Q. Is financial freedom at 40 practically achievable? Because it involves planning and money to achieve financial freedom before 60.

A. Says Dilshad: “Financial planning is actually boring. If you have your kind of agenda written in terms of your budgeting, goals, expenses, cash flows, and assets, I think people can achieve financial freedom.”

“It’s all about disciplined savings and investments, and if you’re able to do that systematically over a period, you know, with the power of compounding, I think, definitely people can achieve financial freedom,” she adds.

Q. So, at a younger age, should one focus on early financial freedom?

A. Says Priya, “If we are referring to Gen Z, I must say, it’s a very impressive demographic because we have quite a lot of clients; young kids coming to us at that age who just started on their first job, starting to invest. And I find that this generation of youngsters, it’s quite complicated to do a financial plan for them because, at that stage of their lives, they go through several transitions.”

Priya explains that every time they come to them for a plan, most of them have almost changed three jobs. “So you ask them, you know, why you’ve just begun, what’s happened?”

Few change jobs because of inadequate pay, some want a lifestyle upgrade, and for many, it is not enough to run a family.

“By the time they are 26, 27, they have seen so many transitions in their lives that, you know, sometimes it’s hard for me to even relate, but it’s a smart generation,” says Priya.

She says youngsters should think about themselves at the age of 75. “How do they plan to take care of that dependent person? The things that you do today must be done to take care of yourself at that age.”

The earlier you start, the better it is.

Q. What should be the retirement plan for someone who is 60?

A. Priya says, “Traditionally, retirement was never an idea. In an agrarian society like ours, people worked till the last day of their life, and now, at 40, you want to retire and chill and then like, do what?”

She implores retiring itself as an idea, but early retirement is a completely different concept. “I would say retire with a plan, not just for the money, but also for your time,” she says. 

She further adds that one should not start retirement planning with a calculator but with a ‘calendar’. “Unless you know what you’re going to do with your time in retirement, all the money you save will go to the hospital; it will not go to your holidays, it will not go to your children.”

Q: What are the main components of retirement planning when calculating a corpus?

A. Says Dilshad, “You must first understand your living expenses and lifestyle, and based on this, you should start planning for your golden years.” She adds, “Typically, those kinds of expenses that will not be there in retirement, like, for example, funding your children’s education, etc. So that’s the trickiest one because we’ve dealt with people who’ve invested in bank deposits and come back to us saying that we’ve exhausted our profits.”

According to Dilshad, unfortunately, today, the majority of savings and investments still consist of fixed deposits. People do not realise that sometimes, with inflation, their real return is actually negative, and therefore, they need to ensure that they invest in asset classes that give them inflation-adjusted returns. 

“So the calculation is not just about the numbers, but also about your life,” the session concludes on this topic.

Regarding how one should tackle the topic of estate planning, experts agree that it can be quite tricky for individuals. “But it’s a must. Lay on its practicality (the discussion of will planning) and get the help of financial advisors wherever needed,” the experts advise.