Dear Deven,
I can’t thank you enough for listening to me yesterday and
more importantly for offering to become the ‘guinea pig’ for the planning
service I wish to offer. I can write a full length post expressing my
gratitude, but that will be a digression. I’m skipping that step hoping that
you understand.
When you dwell deeper on the service I wish to offer, you
will realise that it is a very involved and highly engaging process. I don’t
know of people who offer it formally, though planners have played their role
since time immemorial.
What is
the need to plan for retirement?
I’ll introduce you to a few of my friends.
Vinay was an ex-colleague of mine. In the midst of explosive
growth in the corporate ladder, in his late 40s, he quit job, paid more
attention to his passion of cycling, opened a wood-work workshop for himself
and spent more time with his growing sons.
Sunil, a doctor & teacher at a medical college, in early
40s moved out of a thriving practice in a city to a small town, scaled down
practice and spent more time dwelling within.
My brother Chetan at 34 opted to move out of an MNC and take
up a less engaging assignment with a much smaller company. With the time he
saved, he has been giving more attention to his son.
There are more people I know personally and even more, we
know publicly, who have slowed down, changed course in their 30s, 40s even in
their 50s. There are many others who have picked pace at around the same age.
Amitabh Bachchan did that well into his 60s.
As I see it, these people retired from the course, pace and
scale of their professional life. We begin with certain objective / goal post.
When we reach, we change course or at least have the option to. A large
majority, however, carry on with the momentum long after they’ve reached –
because they’re unconscious.
Retiring from work at 60 is an obsolete norm. Firstly,
because in our times, the objective of earning livelihood gets achieved in
15-20 years instead of 35 and secondly, with life expectancy reaching 80-85, there
is a lot more time to be used post the working life. The need may get even more
acute for our children. When you look around, you find a lot of people, who are
quite miserable in the last couple of decades of their lives. That’s not
because their material needs are unmet or unaffordable, but because they
haven’t planned this phase of their life.
What
should one plan for?
Retirement planning,
in the above sense, is not about planning for adequacy of financial resources
to meet basic needs. It is about becoming conscious of what your updated needs
are and planning to get to them. This is a very interesting exercise – becoming
conscious of updated needs. We’re all unique. By the time we’re in 40s, our
journeys bring us to very different places. Few needs become redundant, few
become bigger and few newer ones arise. Also priorities change significantly.
There is an acute need to balance bandwidth, resources in favour of certain
needs and reduce exposure/dependence on a few others. It’s like portfolio rebalancing.
It does not mean that the earlier direction and decisions or priorities were
wrong. It just means that we’ve grown and we need to be cognisant of that fact.
Factors like quality of food, habits, upbringing of children, contribution to
the society, time for introspection, etc get introduced and also assume
importance. ‘Adequate financial resources’ is a necessary pre-requisite, but
surely not a sufficient one. The act of rebalancing may also alter the notion
of ‘how much is enough’.
Where
does one begin?
- A genuine agreement with the need for planning is an excellent starting point.
- Next up is infusing energy into the planning exercise. Energy comes in when you look forward to, in fact are impatient to get into the execution. When the next phase pulls you, there’s no need for renunciation. Think of the people I introduced above. They didn’t renounce anything at all – in fact they lightened the burden of obsolescence while retaining all that is important.
- With energy stocked up, one can begin from anywhere. Maybe by listing the three most critical priorities, maybe by painting a picture of what a dream life will be after 60, maybe by taking stock of your networth and include the non-financial assets like health, relationships, skills, hobbies, etc.
I’ve given options of starting point. You may opt to use any
other starting point as well. Undirected beginning with high energy is good. My
role will be to moderate and direct the thought process and planning. Sooner
than later, it may get uncomfortable, tiring and even chaotic. But as long as
it is energising, there’s no problem. Planning and execution are not
necessarily sequential in entirety. Execution, however, is a very different
ball-game.
My responsibility is to ensure that my moral compass,
ideologies, likes & dislikes do not
interfere with your planning. It is
also to keep up the commitment and earnestness to the process.
The exercise is a mutually beneficial one, but we ought to
not get blinded by the value it adds to the other. Both of us are in need of
the exercise, but we are doing it for ourselves alone.
I’ve written this exclusively for you. Involving your wife
may benefit immensely. But don’t pass it on to anyone outside of the two of
you.
We will communicate over a blog so that there is a trail of
communication. You can respond in the comments section. I will summarise my
understanding of your comments in my reply in the next post.
Over to you.
