I go past a famous clothing store each day for my walk. One day, I heard a heated argument between an auto driver and two old ladies over the fare. The auto driver said, “Madam, you are still living in the sixties. Costs have increased significantly, and you will have to pay more.”
That is when I realised that labour costs are rapidly increasing in all spheres of India, which will profoundly impact our retirement. Rising labour costs are inevitable as the economy grows, which is essential. Else, the poor would be left behind.
Thanks to inflation, peer pressures and soaring debt, even a higher income is not enough to enhance the lifestyle of the true Indian middle class (Housemaids, auto drivers, patient attenders, supermarket staff, etc.) By the way, no one reading this belongs to that segment.
Someone in my family made a fantastic point. She observed that many of the children of our housemaids are well-read and work white-collar jobs. In about 10-15 years, there will be no one to do household work, and whoever is available will be super expensive, like in the US.
Today, a patient attender for my mom, who works from 8 am to 4 pm, costs Rs. 1000. At 10% inflation, this will cost more than Rs. 4000 daily. And 10% inflation is an underestimate for such services!
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Let us imagine how our lives will be when we are sixty-plus. There are at least three possibilities: We stay in the same house with maids and patient attenders at some point. We stay in a different (alien) city with our children, who take care of us, arrange for helpers, etc., even if we are financially independent. We stay in a retirement home where, for a fat fee, everything is arranged for us.
However, as our lives pan out, it will cost significantly more than what it does today. We must take our retirement planning seriously and invest as much as possible each year.
Each year, when we review our portfolios, we must also review our lifestyles and our expenses. We must look at how retirees cope today and aim to do better when it is our turn.
Many people assume they will have good health because they have good habits and stay fit. Yes, good habits and staying fit are necessary conditions for being physically independent after retirement, but they are not sufficient. We must prepare for the worst while we hope for the best. And while we prepare, we better factor in rising labour costs.
Also see: Why we must invest in relationships for successful retirement planning