Podcast 8th May 2015
Hi I am Arjun Parthasarathy speaking and this podcast is on “Forced Retirement is One Huge Reason to Start Saving Smart for Retirement Now”
The traditional approach to work and retirement is no longer applicable going forward. Enter workforce after college, work till the age of 60 (+/- 5 years) and retire in peace was the tenet of the past generation. The equation has changed dramatically with economies and business going through disruptive and destructive changes. Right from landing a job post college to retiring, the time frames are changing. Weak business cycles, destruction of traditional business in an economy and political changes have led to large scale youth unemployment in many countries around the world.
Disruptive and destructive business environment has made many businesses lower retirement age. I was talking to a person who worked for a multinational firm where the traditional age of retirement was over 70. However disruptions in the business made the company to force employees to retire at 60 and many were completely unprepared for retirement.
Unfortunately, the retirement age can only go lower as the economic and business environment undergo rapid changes. Hence you should be mentally prepared to retire earlier than expected.
Earlier than expected retirement poses challenges on financial security. Steady stream of income stops leading to fewer years to save. Time can also hang heavily on your hands. You would need to have a good backstop in the form of healthy retirement savings to take you through retired life and also help you either acquire new skills or start businesses to keep yourself occupied post retirement.
The need to start saving early for retirement can never be overemphasized. However, savings differ from smart savings. Retirement savings that do not take into account changing business and economic environment only lead to more periods of pain if you are forced to retire early. Financial markets where most of your savings are invested either directly or indirectly are highly impacted by changes in business and economic environment. Volatile financial markets can create huge holes in your savings either directly through lower return on capital or indirectly through inflation.
It is time to think about your retirement investments if you have not thought of it already. Thinking is not enough, it is time to act on your retirement investments if you are not doing so already. Time can run out quickly in this ever changing world.
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