In India, a good chunk of working professionals are salaried, and for those hundreds, the monthly paycheck is what keeps the engine running. With it comes a lifestyle, EMIs, bills, social life, and responsibilities.
While that salary may give a sense of comfort, beneath it is a central question that surfaces for salaried individuals in their late 20s or early to mid 30s: Is the Indian middle class prepared for what retirement has in store for it?
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Reality check on retirement planning and investing
Swarup Mohanty, vice chairman and CEO of Mirae Asset Investment Managers, during a podcast with Finnovate, gave a reality check to professionals delaying their retirement and investment plans.
“At 35, one should realise that one is going to live very long. And at one point of time, what we call active income will stop for a salaried person. Then you have to live the rest of your life based on how much money you have,” he said.
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“And that, if one is not investing, is a very, very scary proposition. Because at that point of time, your only friend will be money. Everything that you want to do will be driven by money. If you’ve not realised that at 35 years of age, you’ve already done a lot of disservice to yourself,” he added.
Understanding the retirement mathematics
Explaining the point, Mohanty broke down the arithmetic and said that if an individual wants to earn around 10 crores, and they start at 20, at 12 per cent they would need to invest some 10-20,000 rupees per month.
“But if I were to start that at 40, probably I’ll have to invest two lakhs per month or something of that sort,” he noted.
He observed that while the mid-30s still offer time to act upon the same, “But at 35, you still are not bad. You can start. But realising the need for money is most important. And the biggest disservice that it will do to you for your old age is not investing as on yesterday.”
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Health care in retirement
Beyond investing, he also emphasised the need for adequate healthcare coverage.
“The second one I’ll leave behind is not having a good medical insurance. This is because your health is very critical. And healthcare will become expensive,” he said in the podcast.
Catch hold of a good planner for you. Start investing as if there is no tomorrow because that’s your dire need. I am not scaring you. I am just leaving behind a brutal truth. If you’re going to live till 90-95, and invariably many are going to live because medical sciences have become much better, then those last 10-15 years can be very, very brutal if you don’t have money,” Mohanty stated.