Last Updated on January 4, 2023 at 4:38 pm
There is more to retirement planning than beating inflation, investing enough and managing the corpus post-retirement. When we just start investing for retirement, everything seems a blur. The corpus seems impossible. The amount we need to invest seems impossible.
However, the corpus does not seem as steep with time, discipline and some luck. The investment amount does not seem so high when our salaries increase. We might even start believing that it is “possible”. There is, however, one aspect that always seems unclear. At least it ought to be unclear to all of us!
We never know how our lifestyle will be after retirement. How active we will be. How healthy we will be. Would we become dependent on others? Yes, this will happen at some point in time we always assume it will be years later.
There are ways in which we can try to combat this uncertainty, and it does not involve asset allocation, investment or returns. It needs building and maintaining relationships.
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One of the most influential movies in my life is, It’s a Wonderful Life (1946). When I saw it on the Star Network in the early nineties, I cried so loud that I had to bolt to the bathroom. It taught me that relationships are more important than money.
The movie opens with 38-year-old George Bailey contemplating suicide so his family can pay his excessive debt from the life insurance settlement. We then look back at the life George has led. He constantly makes sacrifices to help his family and community.
He is forced to run his father’s building and loan business abandoning his world tour and giving his college fees to his brother. When he is about to set off on a honeymoon, the great depression hits, and there is a run on his loan business. They lend all their honeymoon savings to the community to ensure the clients and businesses survive.
The entire community comes to his aid by donating small amounts to pay off his debts. How this happens is the movie’s crux, and I do not want to give too much away. If you can find the movie, watch it with your entire family.
It is not enough if we build ourselves a large retirement corpus. We need to build relationships – social capital, if you like a fancy word. How we treat our spouse, parents, children, their spouses(!), and relatives all our lives will determine how they treat us as we age. And age we will.
How supportive are we of our spouse? Do we constantly force our opinions on our children and make the home a toxic environment for them? Are we always constantly judging their choices? How do we treat our siblings/cousins and their families?
How do we react when our children say they have chosen their life partner? How do we treat them after marriage? Most people speak to others as if they would never age; never lose their health and independence.
This can come back to bite us after retirement. No amount of money will help us if we are unable to manage it ourselves or have a trusted friend or relative, or professional to help us manage it. Just as we invest systematically to build a nest egg, we must continuously build relationships by treating others how we like to be treated.
Most of us will never get close to our retirement corpus targets until we cross 50. At that time, thanks to job pressures and poor lifestyle choices, we could lose a good chunk of our health. Our dependence on others gradually increases.
We may say that we wish to be independent of our children after retirement, but it is not entirely up to us. To quote a line handed down across generations in our family, “having relations is one thing; having relationships is quite another!”
Do we respect our spouses, children, and in-laws? Or do we take them (and our health) for granted? Do we allow them to chase their dreams, or do we try and keep them under our thumb? Do we help our relatives in their time of need? Do we help the community? Do we allocate money to charity?
All these will determine our lifestyle after retirement. Whether we manage to build that large corus or not, we must build as much social capital as possible. Unlike a retirement corpus, social capital will always compound, never get devalued by inflation and never fall to zero unless we decide to let it. We cannot hope to “enjoy” our money in isolation.