The real reason we need money after retirement!

Anyone who has used a retirement calculator would tell you the primary input is current expenses that are likely to persist in retirement. I have always maintained that one should not assume expenses will decrease after retirement! Therefore, I will only exclude cash outgo like EMI and expenses related to children from current expenses. This is all that one can do for now (besides of courses investing). The real reason we need money after retirement is not for 'maintaining our present lifestyle' - the aim of any retirement calculation.

The more I look at retired people, the more scared I get. The main reason for this is life is not an Excel sheet! Life does not pan out as projected on a spreadsheet. Unknown events are beyond our control and it is a bridge that we can cross only when we get to it. However, it probably helps to know that there are bound to be obstacles ahead even if we do our best to plan for retirement.

Health rather than wealth is key to peace and tranquillity in the evening of out lives. If God could guarantee our health after retirement and an instant death, there would no need to plan for retirement! We could be gainfully employed for as long as wanted to.

Even with reasonable health (which is not uncommon), a senior citizen could 'get by' with lifestyle downgrades if there is not enough corpus to spend.

We are living in an age where the concept of family support is rapidly becoming non-existent in India. Forget about brothers and sisters or other relatives taking care of each other. The children are not present when the parents fall sick!

Young parents today have only 1/2 children. When they finish college and are ready to work, they will probably do so in another city or even country. Many of these who study abroad become unemployable in India because of the 'field' they work in. They set up roots in another country, get a mortgage and find it impossible to come back even if they wanted to. We see so many aged parents living alone. Imagine what would be the situation after 2-3 decades when young earners today start retiring!

My point is, not having enough money for day to day expenses after retirement is not a major problem at all. Someone used to Apple products today can choose to live without them after retirement (assuming they are still available!). Someone used to eating out once a week can survive on curd rice thrice twice a day as my cousin often warns me. Such kind of adjustments come naturally to humans if they are forced into a corner. After all, life always finds a way.

My father got a reasonable pension. Before he passed, he was bed-ridden for    about 1.5 years. The total monthly treatment cost was about 5 times his monthly pension (he had no other corpus to speak of). We were driven to debt and found it difficult to meet ends trying to manage medical costs.

Today my mother receives a pretty decent pension (both hers and family pension). However, all of it gets spent in paying for an attendant and the medicines that she takes.

These are totally unexpected expenses, even for someone who has used a retirement calculator and systematically invested as required to beat inflation and all that sort of thing.

If you think I am paranoid, think again. How many people are likely to be blessed with the gift of manageable health post-retirement and an instant death? Most of us are likely to spend a considerable amount of money for healthcare. A good chunk of this would be towards assisted living. Already this is expensive even for attendants who have no training and basically learn on the job. If the attendant assigned to you has an iota of common sense, you should thank your stars. Else it is your job - that is the clients job - to train her on the 'field'.

Hospice care/old age homes  in India are in its infancy. Even those which are expensive comes with no guarantee of proper care. There is not much of a problem if the inmate is mobile and in good cheer. For bed-ridden patients, it could be a living hell.

The real reason we need money after retirement is to pay for such assisted living and medical expenses. They say death and taxes are the only certainties in life. Assisted living and taxes are the only certainties in retirement for most of us.

So the corpus that a retirement calculator coughs up is the bare minimum necessary after retirement assuming we have reasonable health. The point of this post is to emphasise that this a weak assumption.

This means that even a decent nest egg does not guarantee that we can be financially independent of our children. More importantly, we cannot afford to antagonize them! The way we deal with our children when we are young and fit, could well determine the way they deal with us when we are retired! That is scary!

So can anything be done about it? First, I will not assume  expenses will decrease after retirement. Life will find a way to screw me and even things out. Second, I will do my best to invest as much as possible, higher than what a calculator says (if possible).  Third, I will never forget the real reason I need money after retirement.

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14 thoughts on “The real reason we need money after retirement!

  1. subra

    are only 2 mad Indians paranoid about Retirement Corpus building? all others seem to have sorted out their lives. You are talking about 1/2 children. Talk to people about children pre-decesaing, and they think you are morbid. Sometimes scared, sometimes amused.

    Reply
  2. lakshminarasimman

    sir very very beautiful post
    talks almost exactly the fears of a retirement person which i have not seen anybody do

    assisted living is a great business i will buy those shares but i pray for anybody in that

    sir the point about "dealing or antagonizing children" -----
    are you aware of the famous sangu sekandi story ?

    children first observe what their parents do and dont listen to what they say at all
    children constantly raised telling you have to take care of us in old age 99.99% will not take care
    children raised with expectations that parents will support them or kept on supporting them that turn against once they face some life disappointment.
    i see this a lot with sons typically the eldest.
    daughters are better. they may not care for their in-laws but their own parents they won't leave

    Reply
    1. Raj

      Dear Sir,

      Please tell us the sangu sekandi story !
      I am commenting just to know the story.

      You can tell the story here or in Subra's Website (Hope he doesn't mind)

      Reply
  3. Nidige Kumar

    Very candid in describing the truth. Striving for good health is the right approach both pre and post retirement. Working for corporates and living in urban areas increases the probability of losing health in pre-retirement stage itself. Obviously, the health deteriorates in post-retirement. It's catch-22 situation. Corporates exploit the employees making them to work harder at the cost of health, by giving them large cover of health insurance. With regards to the blessing of instant death (that may not happen to many) the solution can be legalising euthanasia. The day one loses cognitive abilities and seeks assistance from other, that should be the time for euthanasia. Sorry for being blunt about this.

    Reply
  4. Chaitanya

    Puttu Sir, I completely agree with you. In fact I have come to conclusion that after 60 one should recognize that better to stop living on medicines and assisted living. Around year 1997 or even in 2000, life expectancy was low. Few people enjoyed pensions. I knew many of my relatives and acquaintances died just at 60. Many of them did not even saw first pension also. I have similar story. My father too died of Cancer. My entire youth got sucked into it. However it was other way round. For his entire life my father lived a very simple life. Not a single puff or a pint of alcohol consumed by him. But still he got a cancer. So life is not fair. We too suffered because of high medical costs. For almost 2 years he was bedridden and after seeing that suffering I decided, if I were to get caught by such a bug then make sure that you live till you are employed and then simply go. No more medicines. We live to enrich medical industry. The modern medicine has improved life expectancy but at the same time it has created more issues at later stage which one can see, can imagine and get scared but cannot help avoid. So better to take a tough decision. So enjoy your life now.

    Reply
  5. Dipankar

    This is a gem of post...In fact I am so happy to see this post that I am going to print it out and make my whole family(parents, spouse) read it aloud...I always thought I was the only one paranoid about "life finding some way to screw us" in spite of the multitude of the trackers, planners etc that we use to plan everything out...The only way I see to prepare for retirement is not take assume the happy path but to assume the worst case scenarios and plan accordingly...
    You can only pray for an instant death..For the rest, we need to be have a nice corpus to sail us through..

    Reply
  6. Anonymous

    In the west, one can buy Long-term care insurance. According to Wikipedia,

    Long-term care insurance (LTC or LTCI), an insurance product sold in the United States, United Kingdom and Canada, helps provide for the cost of long-term care beyond a predetermined period. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.

    Individuals who require long-term care are generally not sick in the traditional sense, but instead, are unable to perform the basic activities of daily living (ADLs) such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.

    While long-term care insurance and service providers are currently non-existent, one does hope that with an ageing population will foster demand and thus enable a market for the same.

    Reply
  7. Vignesh

    Pattu sir

    Very well you have gone into this subject and written some harsh truth very boldly

    Exactly some of my relatives are facing this problem of their children migrating to some other country. Thank God, they have enough corpus and financially they can take care of them.

    Thanks for actually reminding the criticality of retirement planning. I plan to share this article with ten friends and all my family members !

    I think this is one of the best articles and it will hit top notch views / reads in a year.

    All the best ! Continue your good work.

    Reply
  8. sundararajan

    One word. Excellent, you hit on the nail. Very scary but as some one pointed out, Long-term care insurance (LTC or LTCI) will be available in India soon. I bet it will be expensive , but at least may be an option. Even though these are available in western countries , it is very expensive and not many able to afford it. (i am talking about long term care and not insurance)

    Reply
  9. Dr rajnikant v gajjar

    I am practising ANAESTHESIOLOGIST by profession,dealing with operations & critical patients.But for my parents & my father in law,I did not seek critical ICU management in their terminal illness.(not that we were not having health insurance,we were insured & fully prepared to foot the bill if need be)
    Simply because I knew medicine's limits myself,convinced the other stake holders about likely scenario with & without critical management & got their affirmative response.
    This holds true for very seniors,aged 75 or around & with likely multiorgan failures to set in over short period of time or with rapidly deteriorated health with very little time for intervention-like sudden death in less than 1 hour.
    key message I want to share is DOCTOR is no GOD,otherwise I would not have let my dear ones die.Do not be very emotional in certain stages & with all humility accept reality of life.Critical management,many a times is prohibitively costly.
    I agree for retired life,not only more than adequate corpus,but good health & sudden death are also key components of my wish list.
    A genuine & real issue discussed in this post The real reason we need money after retirement!.
    wish you all, all the best
    keep it up

    Reply
  10. sunderarajan

    chief,
    once more a great write up on an issue that is close to my heart and frightens me a lot.
    as you and others have pointed out, there is absolutely no way we can know as to how life would pan out.
    i too hope i have a sudden death.
    -- sunder

    Reply
  11. Shivsankar

    It means the future for unmarried fellows like me is even worse! What if the paid "attendant" wipes my corpus clean and runs away because I can't even click the mouse and entrusted him with the task of withdrawing money? How cheerful, Prof! 😀

    I think instead of wishing for sudden death, I should make it happen myself when I realize that I can't do stuff on my own. Hopefully, it's a few decades in the future and things may change in the meanwhile 😉

    Reply

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